Tata Steel, JSPL, JSW Steel, SAIL shares: 12% safeguard duty ahead? Top stock picks

Shares of steelmakers such as Tata Steel Ltd, Jindal Steel & Power Ltd (JSPL), JSW Steel Ltd and SAIL are in focus today, as Directorate General of Trade Remedies (DGTR) recommended a temporary tax or safeguard duty of 12 per cent on some steel products for 200 days, in a bid to curb imports.

In a press release, DGTR said: "Authority considers that a provisional safeguard duty of 12% will be appropriate to eliminate the serious injury and threat thereof to the domestic industry." Investors were factoring in safeguard duty on steel for some time, as Vietnam, South Korea, Europe and the US have imposed or increased tariff barriers against steel imports in the past few weeks, whereas investigations are ongoing in a couple of countries.

Analysts noted domestic flat steel prices increased 5 per cent in the last month despite weakness in regional prices, in anticipation of the safeguard duty, which was anticipated at 12-15 per cent against a demand of 25 per cent. Domestic prices are at a 7-8 per cent premium to import parity, leaving little room for further hikes in the former case, Kotak Institutional Equities said.

"Margins have bottomed in 3QFY25, and potential supply reforms in China pose upside risk. Rising state taxes on mining is a concern for miners. Prefer non-integrated players Jindal Steel & Power Ltd and JSW Steel Ltd. We have a SELL on Tata Steel Ltd, SAIL and NMDC," the brokerage said.

Kotak noted that a rise in trade action across regions has led to pricing pressure in exporting countries such as China, whereas local prices in importing countries have increased. Export prices in China have declined by 3 per cent in 2025 so far, whereas domestic HRC prices in India are up 7 per cent.

"The current pricing environment remains subdued. Nevertheless, our sense is that investors are willing to look through the current downturn, in anticipation of a mid-cycle recovery. We believe that at some point the interplay of short- and medium-term factors would open the runway to growth and improved profitability for steelmakers. Against this backdrop, we take a neutral-to-positive stance on the sector, with a ’selective picking’ approach instead of going all in. Our favored exposures are Tata Steel and Jindal Steel," Emkay Global said.

Emkay Global said it sees better value in non-ferrous over the ferrous space. Aluminium prices are in a strong upcycle, indicating favorable earnings momentum and margins expansion for non-ferrous equities whereas ferrous equity valuations are already pricing in an earnings recovery, it said. Within its coverage universe, it favored picks are Nalco, Vedanta, Tata Steel, Coal India and Jindal Steel -- in that order.