National Aluminium Company (Nalco) is the top pick in the aluminium sector for ICICI Securities, while Tata Steel remains a strong buy with a target price of ₹235, according to Vikash Singh, Vice President at the brokerage.
Tata Steel’s recent earnings aligned with domestic expectations, despite slight softness in European operations stemming from the UK. The steelmaker is generating earnings before interest, taxes, depreciation and amortisation (EBITDA) of nearly ₹17,000 per tonne in India. With average steel prices currently ₹3,000 to ₹4,000 higher than the July-September quarter of 2026 (Q2FY27), domestic spread improvements are anticipated.
“Effectively we are in for a very good ride in terms of the spread improvement on the steel names in India,” Singh noted.
The firm maintains a bullish stance on the broader ferrous sector, expecting improved performance in upcoming quarters. It recently upgraded Steel Authority of India (SAIL) and Jindal Steel to buy, with a preference for flat steel producers over longs.
In the non-ferrous space, London Metal Exchange (LME) aluminium prices are projected to stabilise between $2,900 and $3,100 per tonne, with an 2027-28 (FY28) annual average maintained at $2,950. This pricing dynamic, coupled with a surge in alumina prices to $400, creates near-term headwinds for Vedanta. Because Vedanta purchases half of its alumina requirements externally, the combination of lower LME aluminium and higher alumina costs is expected to keep the stock range-bound.
These same cost pressures position Nalco as the preferred buy. The company sells three tonne of alumina for every tonne of aluminium produced. Consequently, strong alumina realisations will cushion 70-80% of the hit from lower LME aluminium prices.
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Nalco tops ICICI Securities’ aluminium picks; Tata Steel remains a strong buy
Hindalco ranks as the second preference with a buy rating. Its India and Africa operations are expected to settle at a robust $1,800 to $1,900 per tonne. However, copper margins may moderate to the 800-900 level as elevated sulfuric acid and by-product premiums are unlikely to sustain long-term.
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