3 Metal stocks picked by Jefferies for an upside potential of 23%

Synopsis: Jefferies highlights Tata Steel, JSW Steel, and Jindal Stainless as top picks for 2026, expecting strong growth driven by rising steel prices, increased volumes, and favorable market conditions.

Jefferies Financial Group a leading global, independent investment bank and capital markets firm has provided a positive outlook for the metals sector identifying three stocks as its top picks that represent the firm’s key bets within the metals space  for the new year. 

The preferred list includes India’s leading metal masters like Tata Steel Ltd., JSW Steel Ltd., and Jindal Stainless Ltd. which have built their empire over the years backed by strong operational efficiency and growth, thereby Jefferies covering the firms and expecting an upside potential upto 23 percent in their shares.

Tata Steel Ltd

Tata Steel Ltd., founded in 1907 by Jamsetji Tata, is a global integrated steel producer headquartered in Jamshedpur, India. Its operations span from mining to finished products, covering the entire value chain. The company produces a wide range of steel products, including flat and long steel products, which are used in industries like automotive, construction, infrastructure, and energy. 

Jefferies has initiated a Buy target of Rs. 230 with an upside Potential of 23 percent from the previous day’s close of Rs. 185.70, and the stock jumped upto 1.1 percent compared to its previous close.

JSW Steel Ltd

JSW Steel is one of India’s leading steel manufacturing companies and part of the JSW Group. It is known for producing a wide range of steel products, including hot-rolled, cold-rolled, and coated products, which are used in industries like automotive, construction, energy, and infrastructure, and the company has a strong presence in both domestic and international markets.

Jefferies has initiated a Buy target of Rs. 1,400 with an upside Potential of 18 percent from the previous day’s close of Rs. 1186.30, and the stock jumped upto 0.9  percent compared to its previous close.

Jindal Stainless Ltd

Jindal Stainless Ltd is one of India’s largest manufacturers of stainless steel and a major player in the global stainless steel industry. The company produces a wide variety of stainless steel products, including flat products, long products, and specialty steel, catering to sectors like automotive, infrastructure, consumer goods, and engineering. Jindal Stainless is known for its advanced manufacturing facilities and commitment to sustainability and innovation. 

Jefferies has initiated a Buy target of Rs. 1,020 with an upside Potential of 18 percent from the previous day’s close of Rs. 866.25, and the stock jumped upto 0.5 percent compared to its previous close.

Rationale for the Buy target for these stocks

Jefferies reported that India’s steel companies are expected to see their volumes grow at a Compound Annual Growth Rate (CAGR) of 6% to 9% from financial year 2026 to 2028. The firm also anticipates that the reinstatement of the safeguard duty will further boost domestic steel prices. Additionally, Jefferies predicts that spreads across Asia will recover from their 15-year lows.

Over the past 18 years, Jefferies has pointed out that purchasing shares of Tata Steel or JSW Steel when spreads are below Rs. 200 per tonne has typically resulted in strong returns over the following year.

Furthermore, Jefferies has raised its Earnings Per Share (EPS) forecasts for Tata Steel and JSW Steel for FY 2027 and 2028 by 9% and 17%, respectively, followed by higher expected steel prices, with Indian Hot Rolled Coil (HRC) prices projected to range between Rs. 54,000 and Rs. 54,500 per tonne, compared to the current spot price of Rs. 48,500 per tonne.

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