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JM Financial's Top Metal Picks for FY26

Strategic Insights

— 2 min read

JM Financial has identified Jindal Stainless, Hindalco, and Tata Steel as its top picks in the metals space for FY26, citing their balance sheet strength, margin visibility, and growth potential. The brokerage firm believes these companies will ride out the near-term volatility and benefit from the current quarter's weakness. Despite the challenging September quarter, JM Financial remains optimistic about the rest of the year, anticipating a jump in spreads driven by improved China domestic HRC prices, Indian government action, and seasonal consumption patterns.

Key Takeaways:

  • Jindal Stainless is JM Financial's top pick due to its lowest leverage, highest volume growth, and strong balance sheet.
  • Hindalco is favored for its non-ferrous segment, benefiting from rising LME Aluminium prices and margin expansion.
  • Tata Steel remains a top pick, despite near-term challenges, due to its margin visibility, growth potential, and balance sheet strength.
  • The September quarter is expected to be weak for Indian steelmakers due to lower domestic HRC prices and lower longs prices.
  • Chinese exports are flooding the global market, weighing on global pricing, with China's steel exports for CY24 surging to 111mn tonnes (up ~22% YoY).
  • Beijing's decision to curb domestic production could lend support to international prices if implemented effectively.
  • Non-ferrous companies, such as Hindalco and Hindustan Zinc, are expected to post better margins, driven by rising LME Aluminium and Zinc prices.
  • The brokerage anticipates a jump in H2 spreads driven by improved China domestic HRC prices, Indian government action, and seasonal consumption patterns.

Statistics:

  • Average domestic HRC prices slipped to Rs 49,600 per tonne in the September quarter, a fall of Rs 2k/tn compared to Q1.
  • Longs declined more sharply to Rs 48,600 per tonne, a fall of Rs 7,000 sequentially.
  • Indian ferrous players are likely to witness an EBITDA/tn contraction to the tune of around Rs 3.5k/tn in 2Q given lower realisations partially offset by lower coking coal costs.
  • China shipped out 77.5 million tonnes year-to-date, up 10% compared to last year.
  • China domestic HRC prices witnessed an uptrend in Q2 with spot prices at USD 468/tn, higher by USD 20/tn compared to Q1.
  • Rebar prices corrected to USD 457/tn after spiking briefly in August.
  • Average LME Aluminium came in at USD 2.6k/tn, up ~USD 140/tn vs. Q1.
  • Global Zinc prices rose by USD 120 per tonne quarter-on-quarter.

Sources:

  • "JM Financial on metals: Why the current quarter looks weak" (Contify.com, 2025)
  • "JM Financial on metals: The China factor" (Contify.com, 2025)
  • "JM Financial on metals: Non-ferrous gains momentum" (Contify.com, 2025)
  • "JM Financial on metals: The outlook for the second-half" (Contify.com, 2025)

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