Metals Q1 Results Review - Stable Performance; Spread Is The Key Monitorable: ICICI Securities

ICICI Securities Report

The performance of coverage companies in Q1 FY25 was largely stable. Key points:

1. Ebitda/tonne of most steel players improved QoQ;

2. non-ferrous companies gained from higher London Metal Exchange prices and stable domestic thermal coal prices;

3. NMDC benefitted from better prices, while Coal India benefitted from volume uptick; and

4. net debt rose for a few companies owing to capex acceleration.

Going ahead, we expect ferrous spreads to be aided by lower coking coal price – down by $15-40/tonne QoQ; however, we expect realisation to be lower by almost Rs 2,000-2,500/tonne.

In case of non-ferrous companies, lower LME prices are likely to impact profitability of non-ferrous companies.

Our top picks in the space are: JSPL (Buy; target price: Rs 1,240), JSW Steel (Buy; Rs 1,140) and Hindalco (Buy; Rs 830).

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