Steel Industry Outlook: Kotak Institutional Equities has taken a positive view on the steel sector, raising its EBITDA estimates by 10-15 per cent for FY2027–28E. The upgrade is driven by higher spreads, a wider gap between steel prices and input costs, and a weaker outlook for the Indian rupee, which supports domestic steel pricing.
Steel prices rise nearly 20%
The brokerage highlighted that steel prices in India have surged nearly 20 per cent over the last four months. This rise has been supported by the extension of safeguard duties, higher freight and energy costs, a weaker rupee, and supply disruptions caused by ongoing geopolitical tensions.
India’s crude steel output growth
According to data from the Government of India, the country’s crude steel output continued its upward trajectory in FY2025–26, rising over 10.7 per cent year-on-year to around 168.4 million tonnes during April–March, reflecting strong industrial momentum.
The increase in output was largely driven by robust domestic demand, which expanded by around 7–8 per cent, supported by higher activity across infrastructure, construction, railways, and manufacturing sectors, the Ministry of Steel said in a release through PIB.
Exports surge, imports decline sharply
On the import-export front, finished steel exports surged by 35.9 per cent, reaching over 6 million tonnes during April–March (6.6 MnT), while imports declined sharply by 31.7 per cent. This marks an improvement after two consecutive years of net imports in FY2024–25.
Based on this trade scenario, Kotak Institutional Equities expects steel plants to continue operating at more than 90 per cent capacity utilisation. Additionally, the brokerage expects steel demand to grow at around 7 per cent annually (CAGR) from FY2026 to FY2029.
India targets 300 mln tonnes steel capacity by 2030
In terms of industry expansion, India aims to increase total steel capacity, from the current level of around 220 million tonnes in FY2025–26, to 300 million tonnes by 2030, the ministry said.
The brokerage prefers stocks such as Jindal Steel over other steel-related companies, citing better risk-reward in non-integrated steel producers.
On the other hand, Kotak maintained its ‘Sell’ rating on SAIL and Tata Steel, citing weaker growth visibility and rich valuations.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money-related decisions.)
