Latest news with #NiftyMetalIndex
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Business Standard
6 days ago
- Business
- Business Standard
Nifty at crossroads; HDFC Securities recommends these 2 ETFs
Nifty Metal Index has registered healthy running correction from the recent swing high. In international markets, we have seen bullish breakouts in Iron ore commodity. Mumbai Nifty View Nifty managed to close above its 100 DEMA, which is currently placed at 24595. Recent move in Nifty has resulted in to 'Double Inside Bar' pattern on the daily chart. This pattern signifies a consolidation phase, where decisive breakout on either side of this range would confirm a further directional move. The recent swing low of 24,535 is expected to serve as immediate support. On the upside, 24,785 and 24,950 are two key hurdles for Nifty. Buy Nippon India ETF Hang Seng Bees(426) | Target Rs. 460| Stop-loss Rs. 405 ETF has recently found support on 20 DEMA. Price breakout is accompanied with jump in volumes. 20 DEMA is above 50 DEMA indicating positional bullish trend. Daily RSI is sustaining above 50, indicating sustained uptrend for the underlying. Daily MACD is placed above its equilibrium line. Buy ICICI Prudential Nifty Metal ETF(9.25): | Target Rs. 10,11| Stop-loss Rs 8.75 Nifty Metal Index has registered healthy running correction from the recent swing high. In international markets, we have seen bullish breakouts in Iron ore commodity. Rising iron ore prices indicates higher demand of iron ore and steel, which could benefit metal companies globally. Nifty Metal index has reached near to its long term support of 200 DEMA. (Disclaimer: Vinay Rajani, CMT, senior technical and derivative analyst, HDFC securities, Views expressed are his own.)
Indian Express
16-07-2025
- Business
- Indian Express
Hindustan Zinc: Fundamentals intact, but is the stock worth the risk?
A flurry of developments at Vedanta Group's crown jewel, Hindustan Zinc, has left investors and analysts divided. Over the past 16 months, this traditionally low-volatility stock has seen a rollercoaster ride. On the global front, Trump tariffs and geopolitical tensions have increased silver and zinc prices. On the domestic front, infrastructure development has boosted demand for zinc. On the operations front, the company is firing all smelters, running at 93% capacity, and breaking production records. Hindustan Zinc reported its second-highest revenue and net profit in FY25, following a record year in FY23. Despite this, its stock price has dipped 46% from its all-time high of Rs 807.70 on 22 May 2024. The stock underperformed the Nifty Metal Index, rising 132% in 5 years as against the 347% rally in the Index. 5-Year Stock Price Momentum of Hindustan Zinc and Nifty Metal Index Hindustan Zinc is among the top five silver producers in the world, and the only company that produces silver from primary sources. But its stock reported tepid growth even when silver prices reached a new lifetime high of over Rs 1.15 lakh per kg on July 14. What is preventing the stock from rallying? At the heart of investors' concerns is Hindustan Zinc's ownership structure. UK-based Vedanta Resources (VRL) holds a 56.38% stake in Vedanta Ltd (VDL). VDL holds a 63.42% stake in Hindustan Zinc. VRL has been deleveraging its balance sheet, which accumulated debt over the years from several failed acquisitions. Hindustan Zinc became the crown jewel of VDL as it was debt-free and had strong cash reserves. In May 2024, VDL's subsidiary Vedanta Semiconductors raised Rs 1,804 crore in secured debt from private creditors by pledging Hindustan Zinc shares. Vedanta Semiconductors gave a two-year unsecured inter-corporate loan to VDL, which the latter used to repay debt and pay brand fees to its holding company, VRL. Multiple such transactions shifted VRL's loan to VDL. In FY23, metal stocks had a fantastic year with a cyclical rally and robust profits. As the largest shareholder, VDL has the power to decide the dividend amount of Hindustan Zinc. VDL decided to use the money locked in Hindustan Zinc's reserves by issuing dividends. Hindustan Zinc's Dividends, Reserves, and Borrowings (FY 21-FY25) In FY23, Hindustan Zinc paid Rs 31,901 crore in dividends alone, which reduced its reserves by 64% to Rs 12,097 crore. These reserves are used to fund growth projects and give long-term returns to shareholders. VDL, as a shareholder, had the right to claim the reserves. But this reduced the company's capacity to self-fund expansion. Hindustan Zinc had to borrow money to meet its capital expenditure requirements. FY23 dividend converted the net cash company into a net debt company. While its debt-to-equity ratio remains below 1.0, the loss of reserves has weakened its balance sheet. Significant debt is a concern for metals and mining companies. They sell their output on the commodity prices, which are determined by market forces. They can only control the cost of production (CoP). Keeping debt low helps the company sustain a period of low prices and stay profitable. So far, Hindustan Zinc's debt is sustainable as the high price of zinc and silver and low CoP have increased the company's profits and operating cash flow. However, Hindustan Zinc's share price has declined, at least partly, due to a decrease in equity reserves over the last three years. Hindustan Zinc's Book Value Per Share From August 2020 to April 2025 Hindustan Zinc's promoters have been offloading stake after halving the reserve. Amidst this, Hindustan Zinc CEO Arun Misra's proposal to demerge the zinc and silver business was rejected by the Ministry of Mines. Misra, however, believes that demerging the precious metals segment will be value accretive, as Hindustan Zinc is India's only listed silver producer. This restructuring and reduction of reserves have limited the stock's upside potential. Hindustan Zinc is the second-largest integrated zinc manufacturer in the world. It has one of the lowest CoP at $1,055 per tonne (in FY25). As commodities are bought and sold in dollars, a strengthening of the dollar increases rupee cash flow. All three factors — higher commodity prices, depreciating rupee, and lower CoP — were in Hindustan Zinc's favour, which helped it report an Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) margin of 51% in FY25. Factors Affecting Hindustan Zinc's EBITDA Its revenue surged 18%, EBITDA 28%, and profit after tax 33% in FY25. It reported its second-highest free cash flow before capital expenditure (capex) of Rs 13,784 crore. Hindustan Zinc is growing its production by 3-4% annually through operational improvements, which it believes could generate Rs 50,000 crore free cash flow pre-capex in five years. It now aims to double its production capacity from 1.13 million tons per annum (mmtpa) to 2 mmtpa in the long term as steel demand increases. It announced the first phase of this expansion, under which it will add 250,000 mtpa capacity over the next three years. Hindustan Zinc is basing its expansion on India's ambitious plan to achieve 300 mmtpa of steel production in the next 2-3 years. It expects the phase 1 expansion of Rs 12,000 crore to generate Rs 40,000 crore revenue and Rs 21,000 crore EBITDA. Hindustan Zinc's Earnings Expectations from Phase 1 Expansion Source: Hindustan Zinc Q4FY25 earnings With a Return on Capital Employed (ROCE) of 58%, growth capex should be welcome news. Capacity expansion could lead to higher EBITDA and free cash flow, helping it service debt and rebuild equity reserves, thereby increasing its enterprise value. The capacity expansion is projected to increase Hindustan Zinc's capacity to produce silver. At 1.2 mmtpa, the company produces 750 tons of silver. If the company reaches 2 mmtpa capacity, it could produce 1,200-1,300 tons of silver. The company is also implementing innovative technology at one smelter, which, if successful, could recover an additional 27 mtpa of silver and 6,000 mtpa of lead from the smelter waste without burning. The increasing mix of precious metals could help the company boost profits. These long-term growth drivers are being offset by short-term uncertainty around dividend policies and the parent company's demerger and deleveraging. Analysts have mixed ratings on Hindustan Zinc. JM Financial is bullish on Hindustan Zinc for its low CoP, high-grade, long-life captive mines, and its ability to scale. Even Motilal Oswal is optimistic about the zinc producer's expansion plans, but believes that the market has already priced in the positives. Analyst Ratings on Hindustan Zinc Source: Brokerage Reports Nuvama has a 'Reduce' call on Hindustan Zinc. It stated that expansion will facilitate long-term growth, but commodity prices could affect near-term earnings, making the stock's valuation expensive till then. The miner's valuation is determined by enterprise value to EBITDA (EV/EBITDA). While the capacity expansion and cost efficiencies are growing its EBITDA, high dividend payouts, which result in lower cash, and therefore higher debt, are potentially impacting overall valuations. The company's current EV/EBITDA is 10.7x, higher than its 5-year median of 9.0x, and double that of Vedanta's 5.65x. Adding to the volatility, US-based Viceroy Research took a short position against VRL's debt, alleging that the Vedanta Group is on the 'brink of insolvency.' Vedanta Group has denied the claims, calling them a 'malicious combination of selective misinformation and baseless allegations to discredit the group'. This controversy could keep Hindustan Zinc's share price volatile in the short term. However, Hindustan Zinc's strategic capital discipline, strong fundamentals, leaner cost base, and leadership in the fourth most widely used metal (zinc) make it a resilient stock that could continue paying dividends. Note: We have relied on data from throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information. Puja Tayal is a financial writer with over 17 years of experience in the field of fundamental research. Disclosure: The writer and his dependents do not hold the stocks discussed in this article. The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.
Indian Express
11-07-2025
- Business
- Indian Express
Tata Steel rallied 484% in 5 years: Does the stock have more upside?
'The finest steel must go through the hottest fire.' This quote by Richard Nixon aptly describes the resilience of India's leading steelmakers, including Tata Steel. Despite navigating intense challenges — from costly acquisitions and legacy issues in the UK to a shrinking global market — Tata Steel has emerged as India's most robust integrated steel company. The last five years have been one of the best upcycles for the top three steel players. After bottoming out in the April 2020 pandemic crash, Tata Steel, JSW Steel, and Jindal Steel & Power Ltd. (JSPL) share prices surged 484%, 588%, and 931%, respectively. The Nifty Metal Index surged 525% during this time. This rally is one of the longest cyclical uptrends for steel stocks since the 2003-2008 period, when the three stocks surged almost 1,000%. Investors who felt the heat of the 2008 financial crisis are reluctant to buy steel stocks near their peaks. While it took Tata Steel more than 12 years to cross its 2008 peak, Steel Authority of India (SAIL) is still trading below the 2008 levels. The question now is: Is the cyclical uptrend sustainable? What factors should investors look for when investing in steel stocks? Steel's strength, durability, and heat resistance make it essential for construction, infrastructure, railways, automotive, and industrial equipment. Robust growth in these sectors lifts steel demand. Favourable tailwinds — lower interest rates, higher infrastructure spending, rising incomes, and supportive government policies — have all boosted India's steel consumption and incentivised capacity expansions. Helping these sectors are reduced interest rates, rising investment in infrastructure, increasing income of consumers, government investment, and supporting policies to boost domestic manufacturing. All of these boost production and encourage companies to expand, driving steel demand. India is the world's second-largest steel producer after China, but the production gap remains vast. China is also the largest consumer of steel. As a result, any significant shift in China's demand or supply directly affects global prices. For instance, China's real estate market collapse in 2021 led to a prolonged downturn in the steel sector, pushing the country to offload surplus steel into global markets. Such dumping typically triggers tariffs or safeguard duties from importing nations to safeguard domestic industries. A safeguard duty is more attractive than an anti-dumping duty as it also applies to Free Trade Agreement countries, which accounted for 51% of India's steel imports in calendar 2024. Some positive global macro trends are emerging for Indian steelmakers in 2025. China's policies to boost domestic consumption: In a bid to reduce emissions, the Chinese government asked Tangshan city, which produces around 140 million tonnes of crude steel annually, to curb production by 30% between July 4 and 15, according to Morgan Stanley's July 2 report. The China Iron and Steel Association has also suggested that the government restrict billet exports. The government has also introduced stimulus measures to revive production and drive domestic demand for metals. These events will reduce the export of China's excess steel, reducing price competition for Indian steelmakers. Geopolitical conflicts: A conducive trade environment improves steel demand by boosting factory production while making it easy to procure iron ore and coal. However, geopolitical conflicts have disrupted the global supply chain, with many countries increasing safeguards. Moreover, the US tariff uncertainty has caused volatility in global markets. The surplus steel is finding its way into India, posing a threat to Indian steelmakers. Tariff talks between the US and other countries have increased hopes of easing the tariff burden and finding a more sustainable solution. India's safeguard duties: To counter this, India has imposed a 12% safeguard duty on Chinese steel imports for 200 days. The duty will allow domestic companies to increase steel prices by around Rs 2,000-2,500 per tonne, as import price increases by approximately Rs 4,000 per tonne, according to Nomura analyst Jashandeep Singh Chadha. A higher price could increase the three Indian steelmakers' earnings before interest, taxes, depreciation, and amortisation (EBITDA) per tonne. However, Tata Steel and JSPL have asked for a 25% safeguard duty as China continues to export about 100 million tonnes (mt) of steel. Amid geopolitical uncertainty, domestic steel demand remains strong, and the availability of raw materials is robust. This has helped Indian steelmakers thrive during a period (2020-2024) when average global steel production was stagnant. In FY25, India's crude steel output increased by 4.7% and consumption by 10.2%, driven by construction, urbanisation, and industrial growth supported by government initiatives like the National Manufacturing Mission, the Smart Cities Mission, and Production Linked Incentives. In FY26, India is poised to lead global steel consumption. The National Steel Policy envisages per capita steel consumption to grow from 98kgs in 2025 to 160 kgs by 2030. Indian steelmakers are tapping the growing domestic demand by rapidly expanding capacity. JSW Steel has committed Rs 62,000 crore capital expenditure over the next three years to increase its capacity from 34.2 million tonne per annum (mtpa) to 42 mtpa by September 2027 and 50 mtpa by FY31. Tata Steel has also committed 75% of its Rs 15,000 crore capex for capacity expansion in India in FY26. Tata Steel has an integrated business model. Its operations span from captive iron ore and coal mining to finished steel products, which helps it tightly control costs and improve production efficiency. It is involved in the upstream operations of producing crude steel and the downstream operations of using that steel to produce various grades of steel products for different applications. In the upstream operations, Tata Steel commissioned a coke plant at Kalinganagar in January 2025, reducing its raw materials costs by 9.4% year-over-year and ensuring a low-cost supply. It is eyeing further investment in mining assets to boost capacity. In the downstream operations, the company is innovating to transform semi-finished steel products into finished goods for various applications. It already has a strong presence in automotive and special steels, industrial products, and branded retail products. It has forayed into commercial shipbuilding by supplying grades to Mazagon Dock Shipbuilders, Garden Reach Shipbuilders, and Cochin Shipyard, said T V Narendran, CEO and MD, Tata Steel, at the Q4FDY25 earnings call. In FY25, Tata Steel commissioned the 5 mtpa unit at Kalinganagar and operated all its Indian steel mills at full capacity, achieving a record crude steel production of 21.7 mt and deliveries at 20.9 mt. It turned around its acquired entity, Neelachal Ispat Nigam Limited, delivering Rs 1,000 crore in EBITDA. FY26 could be a landmark year for Tata Steel as Tata Sons Chairman N Chandrasekaran has set a new goal to turn its UK operations EBITDA positive. Tata Steel UK's (TSUK) 2007 Corus acquisition became a persistent drag as the 2008 global financial crisis altered the world for steelmakers. Despite aggressive turnaround strategies, legacy costs, the UK's shrinking steel industry, oversupply from cheap Chinese steel imports, raw material challenges, and poor employee productivity forced the company to consider divestment in 2016 and 2022. After years of reporting exceptional losses, Tata Steel officially put off the fire at its UK blast furnace in September 2024, which has been burning more cash than coal. This will reduce Tata Steel's fixed costs going forward. From FY26 onwards, TSUK's business model will be downsized from integrated steelmaking to a downstream-only processing-based model. It will produce steel products from steel substrate imported largely from India. It plans to reduce costs by another €500 million in FY26 by maximising volume, optimising product-mix, enhancing maintenance practices, and boosting employee productivity. Its long-term goal is to sustain the low cost. Tata Steel is replacing a coal-powered blast furnace in the Netherlands with an Electric Arc Furnace (EAF). The EAF will use recycled scrap and have an annual capacity to produce 3.2 million tonnes of low-emission steel once fully operational by 2027. This, and India's expansion projects, have increased Tata Steel's capex and debt. Is the Tata Steel stock a buy near its 52-week high? Speaking at the 186th anniversary celebration of Tata Steel founder JN Tata in Jamshedpur on March 3, N Chandrasekaran said Tata Steel is dealing with the global geopolitical situation by maintaining efficiency, managing cost, and increasing productivity. It is on track to achieve its twin goals of growth in India and transformation in Europe. With the high fixed cost of the UK operations now behind it, the company is left with a net debt of Rs 82,579 crore. It aims to reduce this debt through internal accruals and external funding. It has a debt-to-equity ratio of 1.04, lower than JSW Steel's 1.24x but higher than Jindal Steel & Power's 0.39x. Tata Steel is also focusing on cost optimisation and aims to reduce its cost by Rs 11,500 crore in FY26 to improve competitiveness. Tata Steel's Cost and Efficiency Program FY26 Target ICICI Securities has a Buy rating on Tata Steel with a target price of Rs 200, a 23% upside from the current market price of Rs 162. It is bullish on the company's strategic capacity expansion in India and cost optimisation of its Indian and European operations. Global brokerages JP Morgan and Morgan Stanley are bullish on Tata Steel UK operations turning profitable. However, the market has already priced in expectations of positive EBITDA from the UK operations. The right metric to value steel stocks is to look at Enterprise Value (EV)/EBITDA. The EV/EBITDA multiple tells us how efficiently a company is using its debt, equity, and cash to earn EBITDA. Tata Steel is trading at an EV/EBITDA multiple of 10.74x, lower than JSW Steel's 14.56x and Jindal Steel & Power's 11.53x, hinting at a better operational efficiency than its peers. If you are bullish on steel stocks, Tata Steel could be a good addition to your portfolio. Note: We have relied on data from throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information. Puja Tayal is a financial writer with over 17 years of experience in the field of fundamental research. Disclosure: The writer and his dependents do not hold the stocks discussed in this article. The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.
Economic Times
03-07-2025
- Business
- Economic Times
Tata Steel shares rally 5.5% in 2 days on China-fueled metals rally, upbeat UK business outlook
Shares of Tata Steel climbed as much as 1.7% on Thursday, extending a two-day rally to 5.5%, buoyed by firm global cues, a rebound in metal prices, and optimism surrounding the company's UK operations. ADVERTISEMENT The stock has surged over 7% in the past week and is up 21% in the last six months, even as it remains 4% lower on a one-year basis. Tata Steel shares rose over 3% on Wednesday, tracking a broader uptrend in global steel futures after improved factory data from China signaled a recovery in manufacturing output. That rally continued on Thursday as the stock touched an intraday high on the BSE. Wednesday's gains came after China's factory activity returned to expansion in June. Official PMI and Caixin PMI both showed the highest output readings since November 2024. This lifted global sentiment, with the most-traded September iron ore contract on China's Dalian Commodity Exchange rising 1.69% to 722.5 yuan ($100.81) per metric benchmark August contract on the Singapore Exchange rose 1.82% to $94.9 a ton. Steel futures on the Shanghai Futures Exchange also advanced, with rebar gaining 2.61%, hot-rolled coil up 2.24%, wire rod rising 1.03%, and stainless steel climbing 1.08%. Other Indian metal stocks also advanced on Thursday, buoyed by positive global cues. The Nifty Metal Index rose 0.8%, with NMDC, NALCO, Hindalco, and Jindal Stainless gaining between 1% and 2%. ADVERTISEMENT Investor sentiment was further lifted by comments from Tata Group Chairman Natarajan Chandrasekaran at the company's annual general meeting. Addressing shareholder queries, Chandrasekaran said Tata Steel's UK operations are expected to perform 'much better this year compared to last year — it will definitely be Ebitda-positive.' ADVERTISEMENT The company's UK business, which has historically weighed on profitability, is now expected to turn Ebitda-positive in the financial year 2025–26 (FY26), with potential for profitability in subsequent Steel's technical indicators continue to signal bullish momentum. The stock is trading above all eight of its key simple moving averages, from the 5-day to the 200-day, pointing to sustained strength across short-term to long-term charts. ADVERTISEMENT The Relative Strength Index (RSI) stands at 69.8, just shy of the overbought threshold of 70, suggesting strong buying interest. Meanwhile, the Moving Average Convergence Divergence (MACD) is at 1.9 and remains above both the center and signal lines, reinforcing the ongoing bullish Steel shares have gained 8% over the past three months and 5% in the last month. ADVERTISEMENT Also read | Tata Steel gets show cause notice over input tax credit of Rs 1,000 cr availed during FY19-23 (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
03-07-2025
- Business
- Time of India
Tata Steel shares rally 5.5% in 2 days on China-fueled metals rally, upbeat UK business outlook
Live Events UK operations expected to turn around Technicals point to strength (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel Shares of Tata Steel climbed as much as 1.7% on Thursday, extending a two-day rally to 5.5%, buoyed by firm global cues, a rebound in metal prices, and optimism surrounding the company's UK operations The stock has surged over 7% in the past week and is up 21% in the last six months, even as it remains 4% lower on a one-year basis. Tata Steel shares rose over 3% on Wednesday, tracking a broader uptrend in global steel futures after improved factory data from China signaled a recovery in manufacturing output. That rally continued on Thursday as the stock touched an intraday high on the gains came after China's factory activity returned to expansion in June. Official PMI and Caixin PMI both showed the highest output readings since November 2024. This lifted global sentiment, with the most-traded September iron ore contract on China's Dalian Commodity Exchange rising 1.69% to 722.5 yuan ($100.81) per metric benchmark August contract on the Singapore Exchange rose 1.82% to $94.9 a ton. Steel futures on the Shanghai Futures Exchange also advanced, with rebar gaining 2.61%, hot-rolled coil up 2.24%, wire rod rising 1.03%, and stainless steel climbing 1.08%.Other Indian metal stocks also advanced on Thursday, buoyed by positive global cues. The Nifty Metal Index rose 0.8%, with NMDC, NALCO, Hindalco, and Jindal Stainless gaining between 1% and 2%.Investor sentiment was further lifted by comments from Tata Group Chairman Natarajan Chandrasekaran at the company's annual general meeting. Addressing shareholder queries, Chandrasekaran said Tata Steel's UK operations are expected to perform 'much better this year compared to last year — it will definitely be Ebitda-positive.'The company's UK business, which has historically weighed on profitability, is now expected to turn Ebitda-positive in the financial year 2025–26 (FY26), with potential for profitability in subsequent Steel's technical indicators continue to signal bullish momentum. The stock is trading above all eight of its key simple moving averages, from the 5-day to the 200-day, pointing to sustained strength across short-term to long-term Relative Strength Index (RSI) stands at 69.8, just shy of the overbought threshold of 70, suggesting strong buying interest. Meanwhile, the Moving Average Convergence Divergence (MACD) is at 1.9 and remains above both the center and signal lines, reinforcing the ongoing bullish Steel shares have gained 8% over the past three months and 5% in the last month.: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
