JSW Steel To Coal India: JPMorgan Sees Ferrous Stocks Outperforming Aluminum Producers In Q1

The metals and mining sector is gearing up for a mixed bag of earnings in the first quarter of FY26, with ferrous stocks anticipated to fare better than their aluminum counterparts, said JPMorgan.

Key expectations include Tata Steel's return to Ebitda breakeven in Europe and JSW Steel's robust growth in consolidated Ebitda, according to the brokerage.

"We expect JSW Steel to post a healthy 10% quarter-on-quarter and 27% year-on-year growth in consolidated Ebitda, driven by improving spreads and volumes," the report noted.

Additionally, NMDC and SAIL are projected to show strong QoQ Ebitda growth, aided by better average selling prices. "Tata should deliver Ebitda breakeven in Europe, with India Ebitda remaining flattish QoQ due to higher ASPs post safeguard duties, despite lower volumes from planned blast furnace relining," the report added.

In contrast, aluminum producers are likely to see a contraction in Ebitda. "Hindalco will be impacted by lower aluminum and alumina prices, as well as the effects of US tariffs on Novelis, estimated at around $40 million," it stated.

Vedanta Ltd. is expected to experience easing cost pressures due to lower alumina prices, partially offsetting weaker London Metal Exchange prices. "We anticipate VEDL's consolidated Ebitda to decline 12% QoQ due to lower LME Aluminum/Zinc prices and ongoing softness in the oil and gas segment," the report highlighted.

The mining sector is also expected to show varied performance. "NMDC's Ebitda could increase 29% QoQ, largely driven by lower costs and better ASPs, even as volumes declined QoQ," the report mentioned.

In contrast, Coal India Ltd.'s Ebitda is projected to grow slightly by 2% QoQ but decline 1% YoY due to weaker e-auction premiums and lower volumes.

Indian steel prices rose QoQ in the first quarter, due to safeguard duties, with domestic HRC prices increasing by 7% and rebar prices by 5%. However, other commodity prices showed declines. "LME Aluminum prices declined 7% QoQ due to US tariff concerns, while alumina prices fell 31% QoQ," the report noted.

The analysts also pointed out that global aluminum inventories are at their lowest level in 10 years, yet prices have not responded materially. "Potential trade deals before the August 1 deadline could drive a rally in base metal stocks," JPMorgan said.