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Systematix Report
Q4 FY26 reflected a broad-based improvement across the brokerage Systematix' metals and mining coverage universe , driven by stronger realisations, volume growth and operating efficiencies. Primary steel producers delivered a strong quarter, with Tata Steel (Hold) benefiting from higher standalone profitability and narrowing UK losses, JSW Steel (Buy) reporting higher realizations, capacity ramp-up and an expanded growth roadmap towards 62mt capacity by FY32, while SAIL (Hold) outperformed on inventory liquidation, operational efficiencies and higher dispatches, resulting in a sharp margin recovery.
In mining, NMDC (Buy) emerged as the strongest performer aided by 21% YoY volume growth and higher iron ore prices, while Coal India (Sell) benefited from improved realizations and profitability despite lower e-auction premiums and dispatches; however, MOIL (Buy continued to face pressure from weaker manganese realizations and elevated employee costs.
Within steel pipes and tubes, APL Apollo (Buy) sustained Ebitda/t above Rs 5,500 despite macro headwinds during the quarter, whereas Welspun Corp (Buy) remains well positioned to capitalize on multiyear opportunities in US LNG, gas pipeline and Saudi infrastructure projects despite temporary inventory-led margin pressure. Jindal Saw (Buy) faced challenges from export disruptions, underutilization and logistics issues, and API license suspension, though recovery is expected through improving utilisation levels and API certification renewal.
Non-ferrous companies delivered the strongest earnings growth across the coverage universe, led by Vedanta (Buy) and Hindustan Zinc (Buy), which benefited from higher commodity prices, production growth, lower costs and expansion projects, while Hindalco's (Hold) India operations remained resilient despite weaker Novelis performance and NALCO (Hold) faced pressure from lower alumina realizations and rising input costs.
Overall, improving steel spreads, favorable commodity prices, ongoing capacity expansions and infrastructure-led demand remain key earnings drivers, while realization trends, raw material costs, export recovery and project execution will determine the sector's medium-term trajectory.
Systematix' pecking order of top picks under coverage is NMDC, Welspun Corp, Jindal Saw, JSW Steel, and APL Apollo.
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