Motilal Oswal sees surging steel prices to offset cost inflation for metal majors. Here are its top stock picks
Motilal Oswal expects firm steel prices, lean inventories and resilient demand to support a shift toward pricing- and cost-led earnings growth for domestic steelmakers. The brokerage sees stronger realisations ahead and favours companies with cost advantages and raw-material access, naming JSW Steel and Tata Steel as its top picks.
Steel prices have been on the rise, leading Motilal Oswal Financial Services to identify domestic steel companies as potential growth opportunities. The brokerage believes the current steel cycle is shifting from volume-led recovery to pricing and cost-led earnings growth. Domestic hot-rolled coil prices have reached a four-year high of Rs 62,000 per tonne, while cold-rolled coil prices have increased to Rs 70,500 per tonne.
Rebar prices have also risen to Rs 56,800 per tonne. The increase is attributed to cost pass-through, with input costs such as coking coal, iron ore, and pellets also on the rise. Despite seasonal weakness, domestic steel volumes remain strong, with production up 3.7% YoY and consumption up 7.2% YoY. The global steel market is also supportive, with global crude steel production declining 0.6% YoY. Motilal Oswal recommends JSW Steel and Tata Steel as top picks in the steel sector.
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