Tata Steel, Hindalco, APL Apollo Tubes: 3 Metal Stocks to Buy, Share Price Targets
Axis Securities has identified Tata Steel, Hindalco, and APL Apollo Tubes as its top picks in the metals & mining sector. The market’s direction will depend on several factors, including the potential announcement of a 25% safeguard duty on steel imports in India, further Chinese stimulus measures, and the ongoing impact of US tariffs on steel and aluminium. Additionally, Fed rate cuts and geopolitical shifts could influence metal pricing trends.
Hindalco: Domestic Strength Amid Global Volatility
Hindalco’s strong domestic aluminium business is expected to cushion the impact of global volatility. Axis Securities has a ‘Buy’ recommendation with a target price of Rs 710.
- The Indian operations are performing well.
- The aluminium market has been boosted by tight supply and high alumina costs, with a 17% YoY rise in LME aluminium prices.
APL Apollo Tubes: Recovery in Demand
APL Apollo Tubes is expected to see a rebound in EBITDA per tonne as demand normalizes. Axis Securities has set a target of Rs 1,750 for the stock.
- Two new greenfield plants in Siliguri and Gorakhpur will cater to East Indian markets.
- The company is expanding into international markets, with the Dubai plant already operating at 58% utilization, and orders coming in from Saudi Arabia.
Tata Steel: Positive Outlook Amid Government Support
Tata Steel’s India operations are outperforming expectations, and the stock is well-positioned to benefit if the Indian government implements the 25% safeguard duty on steel imports. Axis Securities has set a target price of Rs 155.
- Q4FY25 could see a marginal improvement for the steel sector due to better pricing and lower input costs.
- Tata Steel is benefiting from improvements in the UK operations, where EBITDA per tonne loss narrowed sequentially in Q3FY25.
Industry Dynamics: Steel and Aluminium Outlook
Axis Securities forecasts marginally better Q4FY25 for the steel sector, driven by favorable pricing and lower costs.
- LME aluminium prices averaged $2,577/t in Q3FY25, up 17% YoY.
- The US tariff on aluminium imports is reshaping global trade flows, increasing local premiums in the US.
Hindalco’s Upstream Expansion Plans
Axis Securities highlighted that Hindalco is focused on expanding its upstream assets, with a Net debt to EBITDA ratio of 1-1.5 times.
- The company has a well-structured capital allocation strategy, supported by a strong Indian balance sheet and robust domestic demand.
A Fresh Entry Opportunity in Tata Steel
With the recent stock price correction, Axis Securities sees an opportunity for fresh entry in Tata Steel.
- Fixed cost savings in UK operations have contributed to £146 per tonne cost savings, helping offset a drop in realizations.
- The company has improved fixed costs by £70 million QoQ, largely through maintenance cost and operating charge reductions.
In summary, Axis Securities is confident in the future performance of Tata Steel, Hindalco, and APL Apollo Tubes, with favorable domestic demand, expansion plans, and potential policy support creating positive market conditions for these stocks.