Hindalco, NALCO, Coal India, JSW Steel, Among Systematix' Top Stock Picks In Metals, Mining After Q3 Results

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Systematix Research Report

Our coverage companies posted mixed earnings this quarter, broadly aligning with our expectations. Lower steel prices weighed on absolute topline and profitability in Q3, however, operating leverage, disciplined cost control, and robust domestic demand helped partially mitigate this impact, thereby preventing a larger margin decline. JSW Steel (Buy), Tata Steel (Buy), and SAIL (Hold) reported a combined sales volume of 18.78 mt during the quarter, registering 11%/6% YoY/QoQ growth, however, Ebitda margins contracted by 162 bps YoY and 95 bps QoQ.

The steel pipes and tubes segment continued to benefit from industry tailwinds with rising infrastructure and energy projects helping sustain volumes even as margin pressure persisted for players like APL Apollo Tubes due to aggressive discounting strategies while Jindal Saw posted resilient margins strengthened by its diversified product portfolio.

Mining companies under our coverage, NMDC, MOIL, and Coal India (Buy) also posted better offtake in Q3 (+2% YoY, +16% QoQ) as they continued to supply key raw material for steel and power sectors.

Non-ferrous companies posted marginally higher volumes but benefited significantly from input cost efficiency, and high commodity prices translating to a 400 bps/129 bps (YoY/QoQ) Ebitda margin expansion.

Overall, every company in our coverage faces its unique challenges, from regulatory uncertainties to commodity price volatility. However, a select few have implemented effective measures to mitigate these risks, offering attractive multiples supported by resilient cash flows and strong balance sheets.

Our pecking order of top picks under our coverage are Jindal Saw Ltd., National Aluminium Company Ltd., Hindalco Industries Ltd., Coal India, and JSW Steel.

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