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We expect 1QFY27 earnings to remain resilient across the metals sector, led by stronger realizations. In ferrous, higher HRC prices (up 8.7% qoq) should more than offset modest increases in coking coal and iron ore costs, although seasonally weaker volumes are likely to weigh on earnings. TATA and JSTL are expected to outperform on a favorable flat-product mix, while JINDALST and SAIL may lag peers. In non-ferrous, a ~12% qoq rise in aluminium (Al) prices and 7% increase in zinc prices should drive healthy sequential earnings growth. VAML, HNDL, and NACL should emerge as key beneficiaries, while VEDL's performance is likely to be supported by a robust HZ business. Within mining and allied sectors, we expect CIL to report weaker earnings due to lower e-auction realizations and subdued offtake, whereas GRAV should benefit from copper integration and stronger lead realizations, while GRIL’s and HEG’s earnings are likely to remain subdued. Looking ahead, we retain a constructive medium-term view on the sector, supported by safeguard duties, healthy domestic steel demand, China's production cuts, and a structurally favorable aluminium cycle. We continue to prefer VAML and HNDL in non-ferrous, while JSTL and JINDALST remain top picks in ferrous.

Ferrous - Another quarter of earnings torque

We expect ferrous players to report a strong sequential improvement in realizations in 1Q, as HRC prices rose 8.7% qoq, while rebar prices remained broadly flat. The earnings uptick will be mainly driven by a strong pricing environment during the quarter, despite the sequential decline in volumes, as inventory build-up takes place before entering a seasonally weak quarter. On the cost side, coking coal costs rose to an average of $238/t in 1Q (vs $232/t in 4Q), largely due to strong demand and tightened supply; we expect this to exert modest pressure on EBITDA spreads ($12-15/t impact), while iron ore costs should further suppress EBITDA by $5-6/t for non-integrated players. However, we expect stronger realizations to more than offset the rise in input costs. We estimate JSTL and TATA to deliver the sharpest improvement, supported by a favorable product mix skewed toward flat products, while JINDALST and SAIL should underperform peers

Non-ferrous - Aluminium pricing strength to lead sequential gains

We expect the non-ferrous sector to deliver healthy sequential earnings growth in 1Q. A sharp ~12% qoq increase in aluminium prices and 7% rise in zinc prices should aid overall realizations for the base metal equities. HNDL is likely to report improved EBITDA of Rs113bn (vs Rs102bn in 4QFY26), driven by broad-based strength in its India and US businesses, partly offset by 4-5% cost inflation. We expect Novelis to deliver EBITDA of $487mn, with EBITDA/t at $523 (vs $544 in 4QFY26), supported by better scrap spreads and seasonal volume recovery, and lower impact from the Oswego fire incident. We expect VAML to post a strong 1Q performance, with EBITDA of Rs108bn, led by qoq improvement in Al pricing. We believe NACL’s EBITDA will rise to Rs26.7bn (vs Rs23.5bn in 4Q), while VEDL should report a strong 1Q on strong Zinc India performance.

Mining and others - Divergent performance

We expect a mixed 1QFY27 performance across this segment. We believe COAL is likely to report weak qoq EBITDA (Rs80bn, -35%), owing to expectations of lower e-auction realizations and decline in offtake amid sufficient inventory levels. We believe GRAV may see a sequential uptick (EBITDA: Rs1.5bn vs Rs1.1bn in 4QFY26), driven by copper business integration and better Lead realizations. We expect GRIL’s and HEG’s EBITDA to remain weak for 1Q, owing to continuation of the US-Iran conflict during the quarter.

Outlook remains neutral; maintain a selective stance

For ferrous players, we expect earnings over FY27-28E to be supported by the extension of safeguard duty measures, strong demand growth expectations of ~8%, and China’s production cuts (down 15% YoY till May-26). Within the space, JSTL and JINDALST will be key beneficiaries, aided by pricing tailwinds and tangible volume growth potential over the medium term. For non-ferrous players, we expect a structurally improving aluminium cycle (read: A tight market meets a lower cost base), supported by tighter global supply, China’s capacity constraints, and rising energy-led cost curves, to drive outperformance of VAML and HNDL. However, for NACL, we believe current valuations largely factor in the pricing upside. Within electrodes and recycling, we prefer GRIL and HEG, with GRAV remaining our top pick in recycling.

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