SAIL shares could see most upside on this condition but Vedanta can see weakness: Citi

Shares of Indian Metal companies such as NALCO Ltd., Hindustan Zinc Ltd., Hindustan Copper Ltd.

, Vedanta Ltd., Hindalco Ltd., and Steel Authority of India Ltd.



rose between 2% and 4% on Tuesday, April 15. The Nifty Metal Index is one of the top sectoral gainers today, with all constituents of the 15-pack index trading in the green. As global volatility continues, foreign brokerage firm Citi said that it has conducted a scenario analysis across both ferrous and non-ferrous metals.

Within the non-ferrous segment, Citi said that Hindalco appears to be pricing in current spot commodity prices, while Vedanta is factoring in a further correction, either in commodity prices or due to expectations of a weak fourth quarter performance. In contrast, Hindustan Zinc (HZL) continues to trade at elevated valuations, the brokerage said. Citi recommended a pair trade: Overweight Hindalco and Underweight HZL, according to its latest note.

For Ferrous metals, Citi analysed three EBITDA scenarios: - Based on spot prices - Based on import parity (noting that spot prices currently carry a premium over import parity) - Reverting to FY20 (Covid-era) levels The analysis suggested that any decline from current spot EBITDA per tonne would likely trigger a correction in share prices. If spot-level EBITDA per tonne holds, SAIL is expected to have most upside, followed by Tata Steel. Meanwhile, JSW Steel and JSPL appear to have already factored in spot price trends.

Citi believes that a reversion to import parity pricing, currently at ₹3,000 per tonne below spot, is the most probable scenario once uncertainty around reciprocal tariffs settles. As such, the brokerage has reiterated a 'Sell' rating across steel equities..