Steel stocks are companies' shares in steel production, processing, and distribution. India is the world's second-largest producer of crude steel, producing over 100 million tonnes annually. The steel industry employs 20,000 people and contributes 2% to India's GDP. By 2030-2031, the sector is projected to produce over 300 million tonnes of steel annually, with crude steel output reaching 255 million tonnes and finished steel output reaching 230 million tonnes. In this blog, we will explore some of the best steel stocks in India and an overview of the companies.
What are Steel Stocks?
Stocks owned by companies that research develop, fabricate, or market steel goods are known as steel stocks. By purchasing steel stocks, people can become sole proprietors of these businesses and profit from their financial success. As a result, buying the best steel company share in India allows people to profit from the growth and achievements of the country's steel sector.
Disclaimer: The market capitalisation mentioned above is accurate as of 3rd May 2024. However, it is important to conduct research before making any investment decisions in stocks.
Top Steel Companies in India – Overview
Here is the overview of the top steel companies in India:
Ispat Company & Godawari Power:
Godawari Power & Ispat, a metal mining company, trades at Rs 923.05, reflecting a 2.00% increase from its previous close. The stock shows potential value with a TTM P/E ratio of 10.73, below the sector average of 16.11. Analyst sentiment leans towards a strong buy, with no sell ratings. The company's solid performance, evidenced by a net profit of 229.26 Crores in the last quarter and increasing institutional holdings, especially from Mutual Funds and FIIs, indicates growing investor confidence in its prospects.
Maithan Alloys Ltd:
Maithan Alloys, currently trading at Rs 1,275.50, experienced a slight decline of -0.66% from its previous close, with a trading range between Rs 1,322.00 and Rs 1,265.85. Despite this, the stock has shown positive returns of 7.85% over the year and 9.64% in the last 5 days. With a TTM P/E ratio of 11.36, lower than the sector average of 16.11, and a net profit of 85.34 Crores in the last quarter, Maithan Alloys exhibits growth potential. Its listed peers include Indian Metals & Ferro Alloys and Sunflag Iron & Steel Co. With a promoter holding of 74.99% and notable institutional investor interest, including an increase in FII holding from the previous quarter, Maithan Alloys appears to be a stock to watch for potential investment opportunities.
Venus Pipes & Tubes Ltd:
Venus Pipes, currently trading slightly lower at Rs 2,122.95, has shown resilience amidst market fluctuations. Despite the dip, its year-to-date growth stands impressively at 52.28%, reflecting positive performance. With a TTM P/E ratio of 37.97, notably higher than the sector average, the stock may be considered relatively pricey. Analyst sentiment appears bullish, with 3 strong buy and 3 buy ratings. The company's solid financials, including a net profit of 23.27 Crores in the last quarter, coupled with a healthy promoter holding of 48.68%, indicate underlying strength. Moreover, despite slight fluctuations, mutual fund holdings have increased, potentially indicating institutional confidence.
D P Wires Ltd:
D P Wires, currently trading at Rs 497.10, has experienced a slight decline of -0.88% from its last closing price, fluctuating between 529.35 and 495.00. Despite showing negative returns of -12.95% this year and -5.37% in the last 5 days, the company has maintained a TTM P/E ratio of 21.49, higher than the sector average of 16.11. With a net profit of 6.32 Crores in its last quarter and a promoter holding of 74.78%, D P Wires presents a stable position in the market, though its FII holding has decreased. Comparatively, its peers include Roshil Decor and Asian Granito India, positioning D P Wires within a competitive landscape.
JTL Infra Ltd:
JTL Industries, trading at Rs 238.60, has seen a slight decline of -0.50% from its previous closing price but has shown resilience, trading within a range of Rs 242.00 and Rs 235.25. Over the past year, JTL has shown modest growth of 1.03%, with a notable uptick of 15.41% in the last five days. The company's TTM P/E ratio of 33.07 suggests a premium valuation, possibly reflecting market expectations. Its net profit of 30.18 Crores in the last quarter maintains investor confidence.
Shivalik Bimetal Controls Ltd:
Shivalik Bimetal Controls, currently trading at Rs 577.55, has shown a slight decrease of -0.18% compared to its previous closing price. Despite fluctuating within the range of 583.85 and 571.05, the stock has yielded a positive return of 4.90% this year, while experiencing a marginal decline of -0.46% in the last five days. With a relatively high TTM P/E ratio of 39.70 compared to the sector average of 16.11, the company posted a net profit of 16.96 Crores in its last quarter. Notably, Shivalik Bimetal Controls boasts a significant promoter holding of 51.13% and has witnessed an increase in Mutual Fund holding, albeit a decrease in FII holding from the previous quarter.
Rajratan Global Wire Ltd:
RAJRATAN GLO, currently trading at Rs 617.10, has exhibited a slight decrease of -0.36% from its previous closing price. The company has experienced fluctuations within a price range of Rs 613.35 to Rs 629.00. Despite a challenging year with a decline of -20.60% in its yearly performance and -3.03% over the last five days, the stock has shown resilience with a TTM P/E ratio of 41.02, notably higher than the sector average of 16.11. With a net profit of 20.24 Crores in the last quarter, RAJRATAN GLO has drawn attention from analysts, with 2 out of 4 initiating coverage giving it a strong buy rating. The company boasts a significant promoter holding of 65.14% and has seen fluctuating institutional investor interest, with MF holding decreasing and FII holding increasing over the last quarters.
Shyam Metalics and Energy Ltd:
Shyam Metalics & Energy is trading 1.83% lower at Rs 610.00 compared to its previous closing price. Over the recent trading sessions, it has fluctuated within the price range of 629.70 and 606.70. Year-to-date, the stock has seen a decline of -1.06%, while in the last 5 days, it has decreased by -4.94%. The company's trailing 12 (TTM) price-to-earnings (P/E) ratio is 14.83, slightly lower than the sector average of 16.11. Among analysts covering the stock, 2 have given it a strong buy rating, while 1 has recommended selling. Shyam Metalics & Energy reported a net profit of 127.30 Crores in its last quarter. Promoter holding stands at 74.59%, with the remaining 25.02% held by the public. Mutual fund holding increased to 1.99% in the last quarter, while FII holding decreased to 2.35% in the same period. Listed peers of Shyam Metalics & Energy include KIOCL (4.32%)
Uni-Abex Alloy Products:
Uni Abex Alloy Products is trading 0.71% higher at Rs 2,859.05 compared to its last closing price. It has been trading in the price range of Rs 2,925.00 and Rs 2,840.00. Year-to-date, Uni Abex Alloy Products has shown a decrease of -8.26%; over the last 5 days, it has gained 5.25%. The company's trailing twelve-months (TTM) price-to-earnings (P/E) ratio is 15.83, slightly lower than the sector P/E of 16.11. In its last quarter, Uni Abex Alloy Products posted a net profit of 10.46 Crores. The company's listed peers include Rhetan TMT (17.12%), Supershakti Metaliks (4.35%), and Uni Abex Alloy Products itself (0.71%). Uni Abex Alloy Products has a promoter holding of 63.62% and a public holding of 36.38%.
Steel Cast Ltd:
Steelcast is trading 0.86% higher at Rs 653.65 compared to its last closing price. The stock has been fluctuating in the range of 656.50 to 649.00. Year-to-date, Steel Cast has shown a growth of 5.54%, while in the last 5 days, it has experienced a slight decline of -0.74%. With a TTM P/E ratio of 16.42, Steelcast is slightly higher than the sector P/E ratio of 16.11. The company reported a net profit of 17.42 Crores in its last quarter. Notable peers of Steelcast include BMW Industries (-0.86%) and Raghav Productivity Enhancers (-1.17%). Steelcast has a promoter holding of 45.00% and a public holding of 55.00%. As of 31 Mar 2024, FII holding in Steelcast stands at 0.01%, indicating a decrease from the previous quarter.
Tips for Investing in Steel Stocks
Keep the following guidelines in mind while investing in stainless steel stocks:
Solving your Course Work:
First, research the steel business in extensive detail. Learn about recent market developments, key individuals, and financial outcomes. This could help you make wise investing choices.
Learning About the Company:
Analyse the starting points of the Indian steel firms that interest you in more detail. Verify the debt levels, corporate profitability, and share price list for stainless steel.
Maintain a Close Watch on Demand and Availability:
Maintain an eye on the factors that influence the demand for steel, including construction plans and infrastructure development. Consider the supply side, addressing production capacity and raw material availability. Gaining knowledge of these dynamics can help you determine the future of steel.
Monitoring Global Improvements:
Keep informed on GDP expansion, industrial production, and trade regulations. These factors could affect steel pricing and the Indian industry's overall market performance.
Keep Yourself Updated on Regulations:
Changes in policies and laws may seriously affect the steel industry and the market value of stainless steel shares. Therefore, keeping up with import/export taxes, tariffs, and environmental regulations is essential.
Diversify your Portfolio:
Investing in a wide range of steel companies, particularly those with distinct market capitalisations, to diversify your portfolio. By broadening out your risk, diversification enables you to take advantage of different steel industry segments in India.
As always, investors should conduct independent research and/or speak with a financial professional before deciding to invest. The best steel share price reflects the robust performance of leading companies in the industry, enticing investors with the promise of potential growth.
Key Features of Steel Stocks
Steel industry companies have special characteristics that set companies apart from other excellent investment choices:
Cyclical Patterns:
Steel stock performance strongly correlates with the overall health of the economy, and it typically demonstrates cyclical patterns. They constantly succeed in situations of booms in the economy and experience struggles during times of downturn.
Global Demand:
Steel is crucial to many various sectors, including industrial, infrastructure, automotive, and construction. Global demand hence affects steel share price and performance.
Price Sensitivity to Primary Funds:
Coal and iron ore are two natural assets that India uses heavily in its steel manufacturing. The financial viability of steel companies in India can be greatly influenced by considerable shifts in the pricing of India's primary steel stocks. They may therefore affect how well their stocks perform.
Competitive Sustainability:
Several companies are battling for market share in the highly competitive steel sector. Technological advances, cost control, and efficient production are key factors that set companies apart and determine stock performance.
Growth Prospects:
These are companies that you could have in your portfolio as long-term investments. The requirement for steel goods is supported by an expanding middle class and growing financial resources, which makes it profitable for investors to invest in steel stocks.
How to Identify the Best Steel Stocks in India?
Finding the best steel stock in India is crucial. The steel sector needs a thorough analysis of company performance and future growth prospects is important. Consider significant factors, including the company's manufacturing capacity, financial stability, and considerable market standing, when determining which steel stocks are the finest in India. Examine the company's history of stable performance, room for development, and versatility in response to market changes. Analyse its efficiency in operations, technological developments, and commitment to sustainability. Investors are eyeing good steel stocks as market resilience becomes increasingly evident, presenting chances for growth.
Observe substantially the changing trends of supply and demand in the iron and steel sector, in addition to market share. Maintain an eye on macroeconomic variables that affect the business, such as government regulations and infrastructure development. Thorough evaluation and research are necessary to find the best-performing steel stocks in the Indian market.
How to Invest in the Steel Sector in India?
There are multiple avenues to invest in the steel sector in India:
The most straightforward way to invest in the steel sector is by buying individual shares listed on the stock exchange via Exchange-traded funds (ETFs) or Mutual Funds
You could additionally diversify to multiple companies to reduce overall risk
Before investing, do your research and stay informed of government policies that could affect the prices of steel
Your choice of steel sector stocks entirely depends on your overall investment goals and risk tolerance.
Factors Influencing Steel Sector Stocks
Multiple features may influence the outcome and price of stainless steel stocks.
Economic Conditions:
Economic factors, including GDP development, manufacturing capacity, residential activity, and infrastructure funding, greatly impact the steel market.
Supply and Demand Dynamics:
An equilibrium between the supply and demand for steel, which can be affected by production capacity, the ease of availability of raw materials, and international trade regulations, might impact the price of steel stocks.
Pricing volatility for Raw Supplies:
Changes in the pricing of iron ore, coal, and scrap metal shares, which are necessary for steel manufacturing in India, can adversely affect the profitability of steel corporations and the price of NSE steel shares.
Technological Developments:
Developments in energy efficiency, product innovation, and steel manufacturing methods in India can improve the worth of steel companies' stocks and long-term possibilities.
Infrastructure Development:
Steel company's stock values can be subject to investments in energy, transportation, and construction projects. Steel businesses might, therefore, be able to take advantage of this. Investors are eyeing promising steel stocks as market resilience becomes increasingly evident,
Environmental Rules:
Market views on stocks in the metals industry and steel firms might be impacted by compliance with environmental laws and environmentally friendly practices.
Benefits and Risks of Investing in Steel Company Shares in India
Here are some Risks and benefits of investing in steel company stocks in India:
Advantages of Steel Stocks
Risks/Disadvantages of Steel Stocks
Growth Potential: Steel is vital in various industries, driving demand and potentially increasing stock prices.
Volatility: Steel stocks fluctuate due to market conditions and global demand.
Infrastructure Development: Steel is crucial in infrastructure projects, leading to increased demand and potential returns.
Economic Factors: Steel demand is influenced by economic cycles, impacting profitability during slowdowns.
Dividend Income: Some steel companies offer dividends, providing a regular income stream to investors.
Competitive Challenges: Intense competition in the steel industry can affect market share and profitability.
Global Exposure: Steel companies operate globally, offering exposure to international markets and growth opportunities.
Raw Material Prices: Cost fluctuations can impact profit margins and company performance.
Inflation Hedge: Steel prices can rise with inflation, potentially benefiting steel companies' profitability.
Regulatory and Policy Risks: Changes in regulations and trade policies can affect steel sector operations and trade.
Conclusion Steel industry stocks have historically proven to be an attractive investment prospect since steel demand is constantly increasing. These stocks have created exponential profits, allowing you to participate in the expansion of one of India's most stable businesses.
However, like with any investment, steel stocks have their own risks and problems. Market changes, global demand movements, and industry-specific characteristics can impact the best steel share price and performance. As a result, before investing in steel industry companies, you must undertake thorough research and use a reliable stock market app for better understanding.
FAQs on Steel Stocks
The steel stock market in India is volatile, but it has the potential to be a good investment. The demand for steel stocks is set to grow annually by 7.5% to reach 128.85 million tonnes (mt) in the current financial year.
Yes, Steel stocks offer potential for long-term investment, but volatility due to commodity prices, global demand, and regulatory changes warrants thorough research, diversification, and financial advice.
Investing in steel stocks involves risks such as raw material price volatility, regulatory changes, environmental concerns, technological advancements, and competition from alternative materials.
Investors can evaluate steel stocks by considering various factors like financial performance, production capacity, debt levels, operational efficiency, market share, growth prospects, dividend policy, and management quality.
Yes, steel stocks are suitable for long-term investment due to industry growth prospects and cyclical nature, allowing investors to tolerate inherent risks.
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