..... . VALI disclosures . .....: 28/04/26, Goldman Sachs on steel

Tuesday, April 28, 2026

28/04/26, Goldman Sachs on steel

Goldman Sachs sees India’s steel sector entering a phase where domestic demand is expected to drive growth over the next several years. The brokerage has initiated coverage on five ferrous companies and placed selective bets based on capacity expansion, raw material access, and infrastructure strength.

Among these, JSW Steel and Shyam Metalics have been rated ‘Buy’, while Tata Steel and Jindal Steel have got a ‘Neutral’ call. Goldman Sachs recommended ‘Sell’ on NMDC. The report builds its case around rising domestic consumption, improving profitability, and company-specific strengths that could play out through FY32.

Goldman Sachs on JSW Steel: ‘Buy’

Goldman Sachs has initiated coverage on JSW Steel with a ‘Buy’ rating and a target price of Rs 1,490, implying an upside of 18.5%. The brokerage expects the company to expand crude steel capacity to 50 million tonnes per annum by FY31E from 36.4 million tonnes per annum in FY26E, with a longer-term plan to reach 75 million tonnes per annum. It estimates EBITDA per tonne for the India business to rise to around Rs 14,000 by FY28E from Rs 8,850 in FY25, driven by operating leverage and a richer product mix.

The firm also expects improvement in iron ore security to 50% by FY30E from 37% in FY25 and coking coal security to reach 25% from nil over the same period. The stock is currently trading at 7.9 times FY28 estimated EBITDA, while the target is based on 9 times.

“JSW Steel is the fastest growing in terms of capacity player in the India steel space,” Goldman Sachs says in the report.

Goldman Sachs on Shyam Metalics: ‘Buy’

Goldman Sachs has also placed a Buy rating on Shyam Metalics with a target price of Rs 1,065, implying an upside of 28.9%. The brokerage points to the company’s diversified exposure across carbon steel, stainless steel, and aluminium downstream products, along with its relatively low net debt to EBITDA ratio and consistent margin profile.

The firm believes this mix gives it better resilience compared to peers and positions it well to benefit from demand growth across segments.

“Shyam Metalics offers horizontal exposure across Carbon steel, Stainless steel and Aluminum products with consistent EBITDA margins,” Goldman Sachs adds.

Goldman Sachs on Tata Steel: ‘Neutral’

Goldman Sachs has initiated Tata Steel with a ‘Neutral’ rating and a target price of Rs 210, indicating a marginal downside of 0.5%. The brokerage expects standalone EBITDA per tonne to improve to Rs 15,453 by FY30E, supported by cost reduction efforts and operational improvements.

However, it remains cautious due to the potential increase in iron ore costs after FY30 when key mines such as Noamundi and Joda may be auctioned. While Tata Steel has 100% captive iron ore and 25% captive coking coal at present, which gives it an edge in raw material security, reliance on third-party logistics remains a constraint. The stock is currently trading at 7.2 times FY28 estimated EBITDA.

“While we expect structural EBITDA improvement till FY28E across divisions, we believe the uncertainty on iron ore cost post FY30E to likely weigh on valuation,” Goldman Sachs said.

Goldman Sachs on Jindal Steel: ‘Neutral’

Goldman Sachs has assigned a Neutral rating to Jindal Steel with a target price of Rs 1,335, implying an upside of 6.5%. The brokerage acknowledges the company’s ongoing capacity ramp-up and cost reduction potential, which could support earnings growth over time. However, it believes current valuations already capture much of this optimism. The firm notes that while Jindal Steel has completed its brownfield expansions and is improving operational efficiency, it does not see enough headroom for significant re-rating at present levels.

“We are positive on its capacity ramp-up, cost reduction potential, and strong leverage, however, we see current valuations as fair,” Goldman Sachs said.

Goldman Sachs on NMDC: ‘Sell’

Goldman Sachs has taken a negative stance on NMDC with a Sell rating and a target price of Rs 84, suggesting a downside of 3.8%. The brokerage expects the company’s mid-term earnings to face pressure due to slow progress in diversification efforts.

It also points out that the stock is trading at 6.4 times, which is above one standard deviation of its 10-year average, making the risk reward less favourable.

“Mid-term earnings to be impacted by the slow progress in diversification projects; negative risk-reward with the stock trading at 6.4x, above 1std dev. of 10-year mean,” Goldman Sachs adds.

Conclusion

Goldman Sachs builds its coverage on the belief that India’s steel demand will grow strongly, supported by sectors such as construction, automobiles, and energy transition. It expects domestic consumption to reach twice the FY23 level by FY32E and sees India contributing meaningfully to global steel demand growth in the current decade.

Within this backdrop, the brokerage prefers companies that combine capacity expansion with stronger raw material linkages and logistics capabilities.

Source: FinancialExpress

Disclaimer: The above article is for educational purpose only. Not the trading advice

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Trade Cycles

The four important features of Trade Cycle are (i) Recovery, (ii) Boom, (iii) Recession, and (iv) Depression!

The trades cycle or business cycle are cyclical fluctuations of an economy. A full trade cycle has got four phases: (i) Recovery, (ii) Boom, (iii) Recession, and (iv) depression. The upward phase of a trade cycle or prosperity is divided into two stages—recovery and boom, and the downward phase of a trade cycle is also divided into two stages—recession and depression.

Phases of Trade Cycle:

The phases of trade cycle are explained with a diagram:

(1) Recovery:

In the early period of recovery, entrepreneurs increase the level of investment which in turn increases employment and income. Employment increases purchasing power and this leads to an increase in demand for consumer goods.

As a result, demand for goods will press upon their supply and it shall, thereby, lead to a rise in prices. The demand for consumer’s goods shall encourage the demand for producer’s goods.

The rise in prices shall depend upon the gestation period of investment. The longer the period of investment, the higher shall be the price rise. The rise of prices shall bring about a change in the distribution of income. Rent, wages, interest do not rise in the same proportion as prices.

Consequently, the margin of profit improves. The wholesale prices rise more than retail prices. The prices of raw materials rise more than the prices of semi-finished goods and the prices of semi-finished goods use more than the prices of finished goods.

(2) Boom:

The rate of investment increases still further. Owing to the spread of a wave of optimism in business, the level of production increases and the boom gathers momentum. More investment is possible only through credit creation. During a period of boom, the economy surpasses the level of full employment and enters a stage of over full employment.

(3) Recession:

The orders for raw materials are reduced on the onset of a recession. The rate of investment in producers’ goods industries and housing construction declines. Liquidity preference rises in society and owing to a contraction of money supply, the prices falls. A wave of pessimism spreads in business and those markets which were sometime before sellers markets become buyer’s markets now.

(4) Depression:

The main feature of a depression is a general fall in economic activity. Production, employment and income decline. The prices fall and the main factor responsible for it is, a fall in the purchasing power.

The distribution of national income changes. As the costs are rigid in nature, the margin of profit declines. Machines are not used to their full capacity in factories, because effective demand is much less. The prices of finished goods fall less than the prices of raw materials.

✳Reality Tips to Traders

1)Trading in the stock market is a marathon. 2)Protecting your capital is key. (Learn to protect first) 3)Making 0 on the day is better than losing 50k 4)Losses happen; they are part of this business. 5)It’s not you vs. the market. It’s you VS you. 6)You are your biggest enemy; learn to be mentally disciplined. 7)Don’t follow the majority; follow the correct path. 8)Traders without a stop loss end up not being traders for long. 9)There is always another trade. 10)The big money is made waiting for the right set-ups. 11)Waiting for the right trade is the most powerful strategy. 12)It is better to cut a loss than to wait to be proven right. 13)Position sizing can make or break you. 14)Worry about the downside before you even think about the upside. 15)Don’t listen to headlines

..BANKING TERMINOLOGY

There are various types of Banks: PSU Banks, Private Banks, Co-operative/Regional Banks, Small Finance Banks and Foreign Banks. When you deposit money in a bank, let's say the bank gives you an interest rate of 4%. But when the bank lends out this money, they lend it out at say, 12%. The difference of 8% in the above scenario is effectively the profit of the bank! The loans that do not pay interest for 90 days are known as Non-performing Assets. Banks have to provide for such bad loans. Structure of a Bank Asset for a Bank: The asset portion of a bank's capital includes cash, government securities, and interest-earning loans (e.g., mortgages, letters of credit, and inter-bank loans). Liabilities for a Bank: The bank's main liabilities are its capital (including cash reserves and, often, subordinated debt) and deposits. The latter may be from domestic or foreign sources (corporations and firms, private individuals, other banks, and even governments). Banks are required to maintain Liquidity with the Reserve Bank of India: SLR (Statutory Liquidity Ratio): It is the money a bank needs to preserve in the form of cash, gold or government Bonds before providing credit customers. This limitation is added by RBI on banks to make funds available to customers on-demand at your earliest convenience. Banks are required to maintain SLR at 18%. CRR (Cash Reserve Ratio): Banks are required to hold a certain proportion of their deposits in the form of cash. Banks don’t hold these as cash with themselves, but deposit such amounts with RBI / currency chests. CRR rate is at 4.5% currently. Repo Rate: The rate at which the RBI lends short-term money to the banks. The RBI through its Monetary Policy committee changes the repo rate to balance growth and Inflation. Reverse Repo rate: The rate at which banks park their short-term excess liquidity with the RBI. Now let us understand various terminologies for Banks Net Interest Income (NII): This is the spread the bank makes on its lending. It is calculated as Interest Income – Interest Expended Net Interest Margin (NIM): This is the spread the bank makes on its lending. It is the earning which is left after deducting the cost paid to depositors from its yields on Loans. This is denoted in % terms. The formula is Yield on Loans – Cost of funds Capital Adequacy Ratio (CAR): The capital adequacy ratio (CAR) is a measure of a bank's available capital expressed as a percentage of a bank's risk-weighted credit exposures. Essentially, it is the Capital that is available to lend. Tier I Capital – In simple words this capital is freely available with the bank to lend out. Tier II Capital- This is the capital tied up somewhere and is less freely available to lend. In case of an adverse event, the bank can use this capital to lend. Under Basel III norms, a bank’s tier 1+tier 2 capital must be a minimum of 8% of its risk-weighted holdings. The minimum capital adequacy ratio, also including the capital conservation buffer, is 10.5%. Current Account Saving Account (CASA)- There is no interest paid on the Current Account and a small interest rate is paid on a savings account. The combination of both is called CASA which shows the liabilities of the bank on which it pays relatively less interest. Deposits: Bank deposits are a savings product that customers can use to hold an amount of money at a bank for a specified length of time. In return, the financial institution will pay the customer the relevant amount of interest, based on how much they choose to deposit and for how long. Now let us come to NPA. Gross NPA (GNPA): It is the total loans on which no payment has been paid for 90 days or more. GNPA % is usually shown in each Bank’s quarterly results. The percentage is basically the GNPA amount as a % of the total advances. Slippages: Slippages denote the fresh amount of loans that have turned bad in a year. The slippage ratio of a bank is calculated as Fresh accretion of NPAs during the year /Total standard assets at the beginning of the year multiplied by 100. Provisioning Coverage Ratio (PCR): This is the ratio of provisioning to GNPA and indicates the extent of funds a bank has kept aside to cover loan losses. For Instance, a company has GNPAs of Rs 100 and they have set aside 50 Rs, then the PCR is 50%. Net NPA (NNPA): The total figure left after deducting provisions made for bad loans from GNPA. (GNPA – Provisions+upgrades/writeoffs = NNPA) Special Mention Account (SMA) SMA-0 is a category in which stress with respect to the principal and interest has remained overdue for a period of 0 to 30 days. SMA-1 is a category in which stress with respect to the principal and interest has remained overdue for a period of 30-60 days. SMA-2 is a category in which stress with respect to the principal and interest has remained overdue for a period of 60-90 days

..... . VALI disclosures . .....

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