Steel stocks faced a notable downturn, marked by a decline of up to 3.4%, as CLSA downgraded select companies due to stretched valuations and weaker industry spreads compared to rivals. JSW Steel and Tata Steel were downgraded, while Jindal Steel & Power’s underperform rating was reiterated.
JSW Steel shares experienced a 3% decline, after reaching a day’s low of Rs 811 on the NSE in early trading today. CLSA downgraded the stock to ‘Sell’ from its previous ‘Underperform’ rating and adjusted the target price to Rs 730 from Rs 810.
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This correction followed a three-day rally, with over 14.27 lakh shares changing hands on the NSE by 10:05 am, amounting to a total traded value of Rs 117.66 crore.
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Tata Steel also witnessed a downgrade to ‘Sell’ from its earlier ‘Outperform’ rating. CLSA revised the target price to Rs 135 from Rs 145.
CLSA maintained an ‘Underperform’ rating for Jindal Steel & Power but raised the target price to Rs 840 from Rs 820. The brokerage noted that JSPL is relatively better positioned, with margin expansion projects offsetting weaker industry spreads.
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CLSA’s review highlighted rising valuations and trough spreads in the steel sector. The brokerage noted that consensus estimates do not account for spread compression and suggested that the profit pool in India could shift towards miners as steel capacity additions accelerate. CLSA identified a broad-based demand-driven stimulus in China as a key risk to its thesis.
The downgrades had a cascading effect on other steel counters. Shares of the state-run Steel Authority of India (SAIL) declined by 3.4%, while Jindal Saw witnessed a 2% drop. Come from Sports betting site VPbet
