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Goldman Sachs Launches India Steel Coverage
Goldman Sachs has initiated research coverage on five key Indian steel companies, spotlighting a sector expected to grow significantly due to domestic demand through fiscal year 2032. While the firm issued 'Buy' ratings for JSW Steel and Shyam Metalics, citing their expansion plans and diverse products, it assigned 'Neutral' and 'Sell' ratings to Tata Steel, Jindal Steel, and NMDC. These differing calls prompt a closer look at the specific factors influencing each company. Initial market reactions saw JSW Steel trading around ₹1,255 and Tata Steel near ₹210, suggesting investors are digesting these new assessments.
JSW Steel, Shyam Metalics: Goldman's Top Picks
Goldman Sachs forecasts strong growth for India's steel sector, powered by increasing domestic demand from infrastructure, auto, and energy sectors. The firm's 'Buy' rating for JSW Steel, with a ₹1,490 target, is based on its ambitious plan to expand crude steel capacity to 50 million tonnes per annum (MTPA) by FY31E and its expectation of higher earnings before interest, taxes, depreciation, and amortization (EBITDA) per ton, reaching ₹14,000 by FY28E. This outlook is supported by better access to iron ore and coking coal. Shyam Metalics also earned a 'Buy' rating and a ₹1,065 target. The bank highlighted its varied product range, including carbon steel, stainless steel, and aluminum downstream products, along with a strong balance sheet featuring a low net debt-to-EBITDA ratio.
Tata Steel, Jindal Steel, NMDC: Navigating Challenges
Despite the positive sector outlook, Goldman Sachs assigned 'Neutral' ratings to Tata Steel (₹210 target) and Jindal Steel (₹1,335 target). For Tata Steel, concerns about rising iron ore costs after FY30, as mines face auction, are a key factor. This contrasts with its current 100% captive iron ore supply, but reliance on external logistics could become a constraint. Historically, the company has seen inconsistent earnings growth and significant stock value drops, highlighting the sector's cyclical nature. Jindal Steel's 'Neutral' rating acknowledges its capacity growth but suggests current valuations adequately price in this expansion.
NMDC received a 'Sell' rating with an ₹84 target. Goldman Sachs cited NMDC's slow diversification, making it highly vulnerable to iron ore price swings and creating an uncertain mid-term earnings outlook. Some analysts believe bearish scenarios could significantly reduce NMDC's margins, with potential downside targets as low as ₹42–46. Further complicating the picture, weak global steel demand and potential shifts in Chinese export policies and trade regulations could pressure domestic prices and profitability.
Industry Landscape and Company Comparisons
India's steel industry is poised for substantial growth, with projections of 7.4% expansion in CY26 and 9.2% in CY27, driven largely by government infrastructure spending and domestic demand. Recent figures show crude steel production at about 168.4 million tonnes in FY25-26 against consumption of 164 million tonnes. Despite this positive trend, sector profitability faces challenges from volatile raw material costs. Notably, about 90% of the country's coking coal is imported from Australia, the US, and Mozambique, accounting for nearly 40% of production expenses.
Within this landscape, JSW Steel, with a market value of ₹3.07 trillion and a trailing twelve months (TTM) P/E ratio of 41.00, is seen as a rapid growth company, its stock having risen about 23.10% in the past year. Major competitor Tata Steel, valued at ₹2.62 trillion with a P/E of 28.54, and SAIL, are also significant players. While JSW Steel shows quicker inventory turnover and debt collection, Tata Steel benefits from stronger asset utilization and liquidity. Tata Steel's stock has gained roughly 28.67% over the last year.
Shyam Metalics, with a market cap of ₹22,908 crore and a TTM P/E of 45.7, offers product diversification but has experienced a negative one-year stock return of about -8.47%. Jindal Steel, valued at ₹1.28 trillion with a TTM P/E of 38.54, has shown strong momentum, reaching an all-time high in April 2026 and delivering over 40% returns in the past year, supported by robust operating margins. However, current stock prices may already reflect its growth potential. NMDC, India's largest iron ore producer with a market value of ₹784.41 billion and a TTM P/E of 11.12, presents a lower valuation. Its main risks stem from a heavy reliance on a single commodity and slower progress on diversification, reflected in a one-year stock return of around 17.1%.
Future Growth and Analyst Consensus
Goldman Sachs expects India's steel demand to double by FY32E from FY23 levels. Major companies like SAIL, Tata Steel, and JSW Steel are investing heavily in expanding capacity and upgrading technology, aiming for a total Indian steel capacity of 300 MTPA by 2030. Analyst consensus generally favors JSW Steel ('Moderate Buy' average target ₹1,270) and Tata Steel ('Strong Buy' average target ₹233), with NMDC holding a 'Hold' consensus (average target ₹86.67), indicating varied market sentiment.