Tata Steel, SAIL, JSW, JSPL share prices decline up to 3.5%. Buy, Sell or Hold ?

Stock market Today: Tata Steel, JSW Steel, JSPL, SAIL share price ended up to 3.5% lower on Monday. The steel prices remain rangebound, while some demand softness is expected during election season. Should you Buy, Sell of Hold the stocks?

Tata Steel , Steel Authority of India ,JSW Steel and Jindal Steel and Power share prices declined up to 3.5 % on Monday. While a part of correction may also be attributed to weak investor confidence as benchmark indices also declined , nevertheless the range bound steel prices and expected impact on steel demand in the near-term during the general elections also is adding to some concerns.

The analysts channel checks indicate that Indian Benchmark Hot Rolled coil (HRC) steel prices had declined 0.9% week-on-week to ₹53,100 a tonne, a 52-week low, during last week. Spot HRC spreads declined 1% to ₹20,116 per tonne highlighted analysts at Prabhudas Lilladher.

Channel checks by BNP Paribas also indicated a similar trend. As per them, Indian domestic HRC prices that have continued to decline regularly since September’ 2023, saw them average ₹53,875 a tonne in February’2024, a decline of ₹345 a tonne month-on-month. This as per analysts at BNP Paribas pointed that it is the lowest monthly average price since November’2020. 

Even the  price of higher-valued Cold rolled coil or (CRC) fell by ₹368 a tonne month-on-month to ₹61,700 a tonne, the lowest levels since August-2023, said analysts at BNP Paribas. 

The declining steel prices from China and even Korea and other Asian countries is also not a good news as can keep putting pressure on Indian domestic steel prices, while will also lead to higher imports and lower exports.

Analysts at BNP Paribas said that “the fact that Indian domestic HRC costs are significantly higher than import prices from China, South Korea, and Japan suggests that domestic HRC prices in India are under pressure to decline”. India’s export prices too are being impacted by the decline in China’s export prices, they added.

As the price challenges continue, the moderation in input costs will be watched for to support profitability of the companies. Meanwhile the steel demand that has remained robust in the past one year led by government infrastructure spending, however can see some pressure now during the election season. Both the government focus and labor availability sees some impact. 

Rating agency ICRA has highlighted that December 2023 and January 2024 showed a significant deceleration in the increase of consumption to barely 6.5% (compared to a double digit growth in earlier months). Despite the fact that these are preliminary patterns, the data suggests that demand will stay weak over the next two quarters as government expenditure declines around election time, said the report.

Hence while medium to longer terms prospects of domestic steel manufacturers remain strong, near-term prospects may see some impact range bound steel prices and some decline in demand during election season.

Analysts said group stocks, with direct or indirect exposure to Tata Sons’ equity, had rallied in the past few weeks in anticipation of an IPO.

However, news reports suggest that the conglomerate may not be keen on listing, triggered profit taking. 

Tata Sons is registered as a “core investment company (CIC) with the Reserve Bank of India (RBI). It has been classified as an “upper-layer” non-banking financial company (NBFC). This classification requires the company to follow a strict regulatory structure and list on the public market by September 2025. 

“The group’s stocks are trading at slightly elevated valuations, and moreover, there is a correction in small and midcap stocks,” said Chokkalingam G, co-founder of Equinomcs.

With Thanks Reference to: https://www.livemint.com/market/stock-market-news/tata-steel-sail-jsw-jspl-share-price-decline-up-to-3-5-buy-sell-or-hold-11710150255122.html and https://www.business-standard.com/markets/stock-market-news/tata-group-stocks-fall-amid-ipo-uncertainty-m-cap-plunged-by-rs-27-385-cr-124031101122_1.html