The Nifty Metal Index was among the top laggards as analysts expect margins to narrow on high raw material costs and exports revenue to decline due to export duty levy.
Twelve of the 15 constituents in the gauge fell in Friday's session. Still, the analysts prefer Hindalco Industries Ltd., Tata Steel Ltd. and Jindal Steel & Power Ltd. in the sector.
Here's what analysts have to say about the metal sector:
JM Financial
Prefers Hindalco in the overall metal sector.
Tata Steel and Jindal Steel & Power are best-placed firms in the ferrous space (iron-linked).
Most metal firms are likely to report sequential compression in margins due to high raw material inflation.
Expects export revenue to decline due to the government's decision to impose export duty.
Expects softer sales volume on an overall basis in Q2.
Expects the benefits of lower iron ore price by NMDC to likely be visible in Q2.
Expects Hindalco to witness decline in absolute consolidated Ebitda due to significant correction in aluminium prices and inflation in other expenses.
Covid lockdowns in China crippled demand in the sector.
Revisits estimates for steel majors and revises earnings and fair value downward for the coverage universe.
The government's removal of export duty (as and when) and revival of Chinese demand to be key triggers for rally in steel stocks.
Centrum Broking
Reduces Ebitda estimate for Tata Steel by 4.5% and SAIL by 4%.
Maintains estimates for JSPL and JSW Steel.
Reduces Ebitda estimates for Vedanta by 28% and 14% in FY23E and FY24E and Hindustan Zinc by 13% and 8%, due to lower commodity prices in non-ferrous and high thermal coal prices.
Remains positive on the sector despite the cut in estimates due to possible uptick in demand in China and India (post monsoon).
Prefers Hindalco, Tata Steel, JSPL and Vedanta in the sector.
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