Metals Sector Records Resilient Q4 Performance Amid Elevated Commodity Prices

Metals and Mining Sector Delivers Resilient Performance in Q4FY26

India's metals and mining sector reported a largely resilient performance in the fourth quarter of FY26, driven by elevated commodity prices, strong domestic demand, and continued operational efficiencies, according to Axis Direct's latest sector review. Despite global macroeconomic uncertainty, energy market volatility, and geopolitical tensions, most companies under the brokerage's coverage reported earnings that either met or exceeded expectations.

Key Performers

Among aluminium manufacturers, Hindalco Industries' operations in India and Novelis contributed to earnings growth, while NALCO benefited from effective cost management, though its performance was softer than the previous quarter. In the steel sector, Tata Steel delivered results that exceeded expectations, driven by record sales volumes and improved profitability in major regions. The brokerage also noted strong performance by SAIL, which reported healthy earnings growth driven by better realisations and lower raw material expenses.

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Notable Exceptions

On the other hand, Coal India remained the notable exception, reporting weaker-than-expected earnings due to lower stripping activity and higher employee costs. However, the sector as a whole remains well-positioned, supported by strong balance sheets, ongoing capacity expansions, and favourable long-term demand trends across infrastructure, construction, and manufacturing.

Top Conviction Ideas

Axis Direct has reiterated its bullish stance on APL Apollo Tubes and included the stock among its top conviction ideas in the metals and mining space, assigning a 'Buy' rating with a target price of ₹2,250. The company delivered a resilient performance in Q4FY26 despite facing challenges such as war-related disruptions, energy shortages, and inventory destocking during the latter part of the quarter.

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The company maintained EBITDA of around ₹5,500 per tonne, supported by its strong brand positioning, favourable product mix, and supply tightness in the steel tubes market. Management remains confident of sustaining EBITDA at ₹5,000-5,500 per tonne, even in a volatile operating environment. Axis Direct noted that the company is prioritising profitability over volume growth in the near term.

Growth Drivers

Looking ahead, Axis Direct believes the company's Vision 2030 strategy remains a key growth driver. APL Apollo plans to double its production capacity to 10 million tonnes by FY30, from the current 5 million tonnes, supported by greenfield expansions, debottlenecking initiatives, and an increased focus on speciality tubes. The brokerage expects these investments to strengthen the company's market leadership and support long-term growth.

Hindalco Industries

Axis Direct has maintained a 'Buy' rating on Hindalco Industries with a target price of ₹1,220, citing the company's strong expansion pipeline, improving prospects in the copper business, and steady progress at its Novelis operations. The company has a robust list of growth projects underway, including the Aditya alumina refinery expansion, aluminium smelter capacity additions at Aditya, and a copper recycling facility, all of which are expected to support long-term earnings growth.