Welspun Corp to JSW Steel: Jefferies’ top metal picks for Q2

India’s metal and mining companies are expected to post good numbers for the second quarter of financial year 2027 (Q2FY27). Global investment bank Jefferies has chosen Welspun Corp. and JSW Steel as its preferred picks amongst metal stocks for the quarter.

The investment bank said Welspun Corp is well positioned to benefit from a multi-year upcycle in oil & gas infrastructure spending in the US and Middle East, which is supported by local manufacturing in both the regions.

The company is expected to deliver its sixth consecutive quarter of double-digit EBITDA growth, with Q2FY27 EBITDA seen rising 19% year-on-year. Strong order execution in the US will more than offset weakness in India. Welspun Corp’s pipe sales volumes are expected to fall 16% due to continued weakness in India.

Jefferies remains constructive on JSW Steel, as hot rolled coil (HRC) spot prices in India are currently 9% above their average for the September quarter. It expects further upside if Asian steel spreads mean revert, supporting a stronger earnings outlook.

JSW Steel’s consolidated volumes for the quarter are expected to rise 8-10% YoY. The company’s EBITDA per tonne is seen declining 8-9% sequentially, primarily due to higher costs. However, higher volumes should partly offset margin pressure, with consolidated EBITDA seen rising 5% sequentially.

Volume growth in the sector will be led by Shyam Metalics and Energy, with 21% YoY growth, according to Jefferies. Tata Steel’s volumes are also expected to rise 8-10%, while Coal India reported a 12% increase. Jefferies expect Jindal Stainless’ sales to rise a modest 3% YoY, reflecting production disruptions early in the quarter. It also sees Hindalco’s India aluminium sales to remain flat YoY and Novelis’ volumes to grow just 1% YoY.

Tata Steel’s standalone EBITDA per tonne is expected to decline 8-9% sequentially, with consolidated EBITDA estimated to rise 9%. Jindal Stainless’ EBITDA is projected to recover 9% sequentially from the production constrained June quarter.

Hindustan Zinc’s EBITDA is expected to rise 7% sequentially, mainly due to higher zinc prices and strong growth in silver volumes.

Jefferies expects Hindalco’s consolidated EBITDA to fall 17% QoQ but rise 29% YoY, led by a 15% QoQ fall in India aluminum EBITDA per tonne due to lower aluminum prices. It also expects Novelis’ adjusted EBITDA per tonne to decline 9% QoQ to $511.

The global investment bank remains positive on the sector as volume growth is expected to drive earnings in Q2FY27. Jefferies prefers Welspun Corp as it sees a huge opportunity from the growing investment in oil and gas infra in the US and Middle East. It prefers JSW Steel because of rising HRC prices.

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