Morgan Stanley Turns Bullish on Indian Steel; JSW Steel, Tata Steel, And SAIL Among Top Picks

Expectations of expanding steel spreads and stronger domestic demand are seen as key drivers, according to the brokerage
Steel materials gather in the warehouse of Lianyungang Port, waiting to be loaded onto ships in Lianyungang City, Jiangsu Province, China, on June 1, 2025. (Photo by Costfoto/NurPhoto via Getty Images)
Steel materials gather in the warehouse of Lianyungang Port, waiting to be loaded onto ships in Lianyungang City, Jiangsu Province, China, on June 1, 2025. (Photo by Costfoto/NurPhoto via Getty Images)
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Arnab Paul·Stocktwits
Updated Sep 08, 2025 | 1:37 AM GMT-04
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The Nifty Metal index rose 1.2% in early trade on Monday, led by gains in steelmakers such as Tata Steel, SAIL, and JSW Steel, following Morgan Stanley's bullish outlook on the sector.

The Nifty Metal index has been on a strong run lately, gaining in five of the last six sessions and adding more than 7% during the period.

Steel Authority of India (SAIL) and Tata Steel were the top gainers on the index, rising 3.97% and 2.31%, respectively.

Domestic Demand To Drive Growth

Morgan Stanley expects select steel stocks to outperform the broader materials space in the coming months. The brokerage highlighted expectations of expanding steel spreads and stronger domestic demand as key drivers for the sector’s near-term momentum.

Morgan Stanley upgraded JSW Steel to an ‘Overweight’ rating, raising its price target to ₹1,300. It also upgraded Tata Steel to ‘Overweight’ with a target of ₹200, citing their strong positioning to benefit from hot-rolled coil (HRC) price expansion.

Among the two, JSW Steel remains the brokerage’s preferred pick due to its stronger growth outlook and higher exposure to the domestic market, despite richer valuations.

For Steel Authority of India (SAIL), Morgan Stanley lifted the rating to ‘Equalweight’ with a price target of ₹140. The brokerage noted that SAIL’s earnings are highly sensitive to steel price movements, given its relatively low profitability base. However, it refrained from moving to ‘Overweight’ due to weaker volume growth prospects and expensive valuations.

On Jindal Steel and Power (JSPL), the brokerage retained its ‘Equalweight’ stance but raised the target price to ₹1,150. While acknowledging JSPL’s strong volume growth outlook, Morgan Stanley highlighted its higher dependence on long steel products, which may limit margin expansion compared to peers.

Morgan Stanley expects domestic steel prices to rise on improving demand, while global macro factors such as potential US rate cuts and a softer US dollar provide additional support. It also pointed to the possibility of a safeguard duty extension for three years, which could further boost margins for Indian steelmakers.

The brokerage increased its steel price estimates by 3% for FY27 and FY28.

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