2025-05-28-Jefferies-钢铁行业找到火花_63页_5mb

India Metals & Mining Equity Research Summary (May 28, 2025):

This report outlines the investment thesis for key Indian metals and mining companies, focusing on steel and coal sectors.

Steel Industry:

• India offers a rare growth oasis in global commodities, with strong domestic steel demand projected at 7-8% CAGR (FY25-27E), aided by government initiatives and power consumption growth.
• Major steel producers (Tata Steel, JSW Steel, Jindal Stainless) are expected to grow volumes by 8-10% CAGR. Tata Steel's India business is increasingly dominant (71% of volumes by FY27E).
• Steel prices have bottomed due to safeguard duties (12% on imports), creating a favorable risk-reward at ~$200/t Asian conversion spreads, historically linked to positive stock returns.
• Valuations and margins are set to improve. Tata Steel and JSW Steel upgraded to "Buy" from "Hold". Jindal Stainless added as an additional "Buy".

Coal India:

• Strong economic outlook and power demand support ~5% volume growth (FY25-27E). Valuations remain attractive with 8.2x FY26E PE and a declared 7% dividend yield.

Hindalco:

• Slower aluminum volumes and prices (Novelis growth just 1% CAGR) lead to downgrading to "Hold" due to muted growth prospects and rising debt. Valuation remains reasonable albeit earnings muted.

Key Recommendations & Target Prices (as of May 28, 2025):

• Coal India: Buy - PT INR 455. Strong volumes, steep valuation expansion potential.
• Hindalco: Hold - PT INR 690. Valuation not expensive, but earnings lackluster.
• Tata Steel: Buy - PT INR 200. Higher PB justifies diligence for its India business tailwinds.
• JSW Steel: Buy - PT INR 1,200. Higher multiple for non-BPSL business growth.
• Jindal Stainless: Buy - PT INR 800. Industry leader with lower volatility and better balance sheet.

The report highlights risks including geopolitical events, global recession probability improvement, falling China spreads, India infrastructure execution, and steel price volatility. Tailwinds include India growth acceleration, safeguard duties, power demand, fertiliser demand, and demand recovery from China.