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Quick Pointers

* HRC and rebar prices rose 15% & 21% QoQ respectively.

* Aluminium rally continues, up 13% QoQ, alumina dips 3%.

We expect our metals coverage universe to deliver a strong performance in Q4FY26, with revenue/EBITDA/PAT growth of 15%/23%/64% YoY (14%/25%/25% QoQ). Steel prices, which began firming up in mid-December on rising coking coal prices, continued to strengthen through the quarter. Safeguard extension, lower Chinese exports, stronger domestic infra demand and rising costs due to war related disruptions aided steel prices. We expect double digit volume growth for TATA & JINDALST, and mid-single digit for JSTL & SAIL, supported by resilient domestic demand and improved govt. spending. We also expect average NSR increase by ~8% QoQ, driven by higher HRC prices (restricted by contractual volumes, full impact will come in Q1FY27). Coking coal prices remained volatile during the quarter, while Odisha iron ore prices remained largely flat, providing some relief to spreads. As a result, spreads moved north of INR 27k/t towards the end of Mar’26, with average spreads for Q4 rising 24% QoQ to INR 22k/t. As a result, EBITDA/t for steel companies is expected to increase by ~INR 2.2k/t QoQ driving a robust earnings growth.

Middle East supply disruptions led to sharp jump in aluminium metal prices during Q4. We expect non-ferrous companies to benefit from higher LME in the near term (~$3,500 on spot, up 13% QoQ). As war subsides, we expect strong domestic infra demand, protected steel prices and ramp up of recently commissioned capacities to aid steel sector EBITDA growth. Key monitorables to watch out for: 1) domestic demand momentum, 2) recovery in global economy, and 3) China’s continuation of anti-involution policy & stimulus to drive economy. We roll forward to Mar’28 and maintain positive stance on ferrous over aluminium stocks. Our top picks are TATA, JSTL and NMDC.

Spreads expansion offsets cost pressures amid export challenges: Indian steel exports to the Gulf region have been impacted by logistical bottlenecks, rising freight costs, and elevated insurance premiums. From a profitability standpoint, the current quarter has seen a notable expansion in spreads, driven by a steady rise in both flats and longs prices throughout the quarter. However, the fuel- and gas-related price surge has started affecting production across the country, which could partially affect costs for one month of the quarter. That said, the expansion in spreads should help cushion the increase in manufacturing costs, and producers should be able to pass on the same.

We expect NMDC’s average NSR to decline 1% QoQ as NMDC couldn’t take price hike in Q4; however, it has taken a steep INR 500/t price hike in Apr’26 which upgrades our earnings. We expect EBITDA/t to increase by INR 35/t QoQ to INR 1,723/t as higher volume growth (20% QoQ) volume would give operating leverage. We expect NMDC to take further price hikes in Q1FY27 if global rates remain higher led by higher freight rates.

Jindal Stainless (JDSL) is expected to report muted volume growth due to shortage of propane impacting March production. Closure of key shipping routes has impacted exports, while domestic fuel availability constraints might affect production in April; however, rising SS prices are cushioning the impact. We expect cons. EBITDA/t to jump ~32% YoY to INR 21,839 on weak base.

Strong LME to aid earnings: The performance of non-ferrous companies under our coverage universe is expected to remain strong in the near term on strong LME prices. In Q4FY26, average aluminium (ally) prices improved further 13% QoQ while alumina prices were down 3% QoQ. HNDL’s India business is expected to witness strong EBITDA growth aided by copper business and higher by-product prices, despite 64% LME hedged at USD2,807/t for the quarter. Novelis’ performance is expected to remain subdued due to the twin fire incidents at its Oswego plant (total est gross cash flow impact of $ 1.3-1.6bn), which damaged certain equipment and led to near-term volume losses (~70kt in Q4). The plant is expected to restart in late H2CY26, and it may impact Novelis Q1 EBITDA/t as well. US tariff impact for the quarter is expected to remain minimal as guided by the management earlier. NACL’s performance is expected to remain subdued, primarily due to weak alumina prices. Additionally, management highlighted issues around certain imports getting stuck in Jan’26 during the last quarterly call; since then, the situation has worsened, likely to impact exports further, especially in the final month of Q4FY26. While higher LME aluminum prices provide some support, this remains the only meaningful near-term positive driver, partially offsetting weak alumina prices and volumes.

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