Tata Steel, Hindalco, NALCO Among Axis Securities Top Picks In Metals Pack Ahead Of Q2 Result— Check Full List

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Axis Securities Report

In Q2 FY26, we foresee an increase in absolute Ebitda across both steel and aluminium players. For the steel companies under our coverage (Tata Steel and SAIL), we expect Ebitda to improve QoQ, mainly led by higher sales volume aided by lower/flat coking coal consumption costs, partly offset by lower sales realisation due to a drop in HRC prices in the quarter.

Average domestic HRC prices in Q2 FY26 decreased by 2.4%/4% YoY/QoQ due to the extended monsoon; the prices declined despite Chinese HRC prices moving up 3% QoQ. Domestic steel HRC prices are now trading at ~12% discount to landed Chinese HRC prices, which could provide a buffer for steel mills to hike steel prices in a scenario of demand uptick post monsoon.

Average steel spreads in India on a consumption basis in Q2 FY26 have decline by ~6% QoQ, mainly due to decline in HRC prices (down 2.4%/4% YoY/QoQ) and increase consumption cost from iron ore (average Q1 FY26 Lumps and Fines prices from NMDC were higher by 4% QoQ each), partly offset by decline in coking coal consumption due to drop in coking coal prices by 3% QoQ in Q1FY26.

We expect Tata Steel and SAIL’s Ebitda to increase on a QoQ basis by 14% and 20%, respectively. Both the Indian and European operations of Tata Steel could see Ebitda improvement. Aluminium companies under our coverage (Hindalco and NALCO) are likely to post resilient numbers QoQ, mainly led by strong LME Aluminium prices, which grew by 10%/7% YoY/QoQ in Q2FY26.

Ebitda at Hindalco and NALCO is expected to increase by 5%/6% QoQ in Q2 FY26.

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