Shares of JSW Steel and Tata Steel have declined 9-10% since the onset of the West Asia conflict, even as domestic steel prices have risen about 6%. Jefferies believes this gap presents a buying opportunity.
The brokerage expects strong EBITDA growth of 30-45% year-on-year for both JSW Steel and Tata Steel in FY27E.
It highlighted three key factors supporting its positive stance.
First, an improving demand-supply balance in China. Steel production in China has declined 9% YoY over the past five months, while net steel exports fell 6% YoY in January-February 2026.
Second, Asian conversion spreads are recovering from near 15-year lows. Current spot spreads are about 9% above the March quarter average, although still 35% below the long-term average.
Third, further upside to domestic steel prices. Jefferies expects mean reversion in Asian spreads to lift Indian steel prices to around ₹64,900 per tonne, compared to current spot levels of ₹57,500.
On the risk side, the brokerage cautioned that a prolonged West Asia conflict could weigh on domestic steel demand.
However, it said that earnings are more sensitive to price movements than volumes.
Out of the 35 analysts that have coverage on Tata Steel, 23 of them have a ‘Buy’ rating on the stock, while six each have a ‘Hold’ and a ‘Sell’ rating.
On Monday, shares of JSW Steel ended 0.77% lower at ₹1,132.50, while Tata Steel closed 0.75% higher at ₹195.60.
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