D-Street Buzz: CLSA tags Hindalco with 'buy', Tata Steel with 'outperform' as metals shine

"While we turn incrementally positive on ferrous, we continue to prefer Hindalco Industries over steel names. We upgrade Tata Steel to outperform from sell and raise target to Rs 130 from Rs 95 per share and Jindal Steel & Power to underperform from sell and raise target to Rs 610 from Rs 430 per share," CLSA said.

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The stock market is trading in the green led by the metal index which added over a percent in the morning session on January 18.

The S&P BSE Metals index was up 1.66 percent at 10:38am, led by gains from Hindustan Zinc, APL Apollo Tubes, Jindal Steel & Power and Tata Steel which were up 2-3 percent each. The other gainers included Hindalco Industries, SAIL, Vedanta and JSW Steel.

According to global research and broking firm CLSA, the steel outlook improved while global news flows would continue to dominate outlook for the Indian metals sector. A faster reopening in China and stimulus has provided a new lease of life for the sector, although on-ground demand improvement is still elusive, it said.

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"The US recession now looks imminent but could be shallower than earlier expectations. While domestic demand is resilient, large steel capacity addition could keep dependence on exports high," the research firm said.

It expects the steel prices to rise in the near term (in line with or at a discount to import parity) before softening in the following quarters.

"While we turn incrementally positive on ferrous, we continue to prefer Hindalco Industries over steel names. We upgrade Tata Steel to 'outperform' from 'sell' and raise target to Rs 130 from Rs 95 per share and Jindal Steel & Power to 'underperform' from 'sell' and raise target to Rs 610 from Rs 430 per share," CLSA added.

Also read: Tata Steel faced tough times in India in Q2FY23, in Europe in Q3: TV Narendran, MD

CLSA also has Hindalco Industries as a 'buy' and has raised the target to Rs 580 from Rs 515 per share and has maintained the 'sell' rating on JSW Steel with the target raised to Rs 640 per share while it has an underperform rating on Vedanta with target at Rs 295 per share.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.​