Goldman Sachs Sees India As Steel Growth Driver, Demand To Double By FY32: Metal Stocks Rise Over 1%

Metal stocks rose over 1 per cent on April 28, outperforming benchmark indices after Goldman Sachs said it sees India as the next driver for steel demand. The global brokerage believes that India will be at the centre of the next upcycle for growth as China’s dominance as the leader of steel demand fades.

The Nifty Metal index rose as much as 1.3 per cent during the session, before retreating to around 0.38 per cent, as overall markets were in a consolidated zone ahead of the US Federal Reserve’s policy meeting. The benchmark Nifty was trading 0.3 per cent lower at 24,011.10 while the Sensex traded 0.5 per cent down at 76,908.62 at the time of writing.

In a recent report, Goldman Sachs said, “India is driving incremental global steel consumption in the current decade, reminiscent of China from CY05-20,” noting a structural shift where the country is showcasing a unique distinction of being the only major nation globally which produces as well as consumes iron ore. The brokerage has initiated coverage on India’s ferrous metals sector against this backdrop.

Goldman Sachs sees India’s steel consumption nearly doubling to 212 million tonnes by FY32, indicating a growth of 6.8 per cent CAGR. This growth will be driven by demand in infrastructure, urbanisation and the manufacturing sector.

As of 2024, India’s steel consumption was around 102 kg, just 48 per cent of the global average. This indicates a significant headroom for growth given the government’s increased focus on construction and infrastructure.

“Among major steel-consuming countries, India is the only one where steel consumption has not peaked,” the brokerage said.

Among the top picks in metal stocks of the brokerage are JSW Steel, which has been given a ‘buy’ rating with the target price of Rs. 1,490 per share, and Shyam Metalics, given a ‘buy’ rating with the target price of Rs. 1,605 apiece. The brokerage cited growth visibility and business diversification as the reasons for their picks.

Further, the brokerage assigned ‘neutral’ ratings to Tata Steel at Rs. 210 per share and Jindal Steel at Rs. 1,335 per share. Meanwhile, it maintained a ‘sell’rating on NDMC shares at Rs. 84 apiece, citing concerns around the volume growth and rising competition for the company.