Right time to invest in metal stocks? Jefferies cautiously optimistic for 2024

Metal stocks India: As market participants await the onset of the corporate earnings season for India Inc due next week, Jefferies has maintained a ‘buy’ call each Tata Steel, Coal India and Hindalco Industries while upgrading JSW Steel to ‘hold’ from ‘underperform’. The brokerage is cautiously optimistic on the metal basket, which had a tough 2023.

The Nifty Metal index, whose 15 constituents include Tata steel, Vedanta, Hindustan Zinc, SAIL and NALCO, finished a record-breaking 2023 on Dalal Street with a gain of 17.9 per cent, in line with a 20 per cent rise in the headline Nifty50 index—its best yearly return in two years.

The brokerage expects Coal India to register a healthy volume  CAGR of 6-15 per cent over FY24-26 on the back of rising power demand, and Tata Steel and JSW Steel owing to capacity expansion. 

"Coal India FY25-26 EPS are 19-21 per cent above Street (estimates). Its 7.3x FY25E PE and 7 per cent dividend yield are attractive," analysts at Jefferies wrote in the report. 

Jefferies prefers Coal India from the space amid global uncertainties. Here’s where the brokerage has placed its targets for four metal stocks:

JSW Steel share price target

Jefferies has upgradeed to hold call on JSW Steel from underperform. The brokerage has raised the target by Rs 100 on the counter.

Tata Steel share price target

Jefferies has maintained a buy call with a target of Rs 160.

Coal India share price target

Jefferies on continued a Buy call. The brokerage has raised the target by Rs 25 to Rs 450 from Rs 425 earlier.

Hindalco share price target

Hindalco has maintained a buy call on the aluminium manufacturing company with a raised target of Rs 725 from Rs 660 earlier.

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