While Q3 FY26 was largely driven by the non-ferrous segment, we believe the sharp recovery in steel prices is likely to support improved performance across the ferrous sector in Q4 FY26. Steel prices have rebounded meaningfully after bottoming out in Dec’25. India remains at the center of the global ferrous growth story, underpinned by strong infrastructure spending, continued urbanization, and manufacturing-led expansion. Domestic spot HRC prices have increased by ~30% since Dec’25 to ~Rs59,500/tonne, while spot primary rebar prices have risen by ~29.5% to ~Rs60,000/tonne over the same period. That said, a similar uptrend has also been observed in the aluminum sector since Mar’26. Ongoing disruptions in the Middle East have impacted ~9% of global aluminum supply, leading to a price increase of ~$430/tonne since end-Feb’26.

On the cost side, key ferrous RM prices, particularly coking coal, have risen to ~$251/tonne in Q4 FY26 (avg. Q4 prices) and domestic blended iron ore prices increased ~Rs150-200/tonne during the quarter. Further the recent increase in global shipping rates too have increased the overall cost curve. Despite this, we expect the improvement in steel realizations to more than offset the increase in RM costs. Moreover, current spot steel prices remain higher by ~Rs3,000–5,000/tonne v/s Q4 average, which should help sustain the momentum into Q1 FY27.

Ferrous sector profitability expected to improve in Q4. Supported by a recovery in domestic steel demand and ongoing inventory rationalization by select players, domestic sales volumes of Tier-I steel mills are projected to grow by ~6% y/y to ~22m tonnes. Among peers, JINDALST is likely to report the strongest volume growth of ~17–18% y/y to ~2.5m tonnes, while a positive surprise is expected from SAIL with annualized volumes surpassing 20.1m tonnes. The improvement in steel prices is expected to drive a sequential increase in average consolidated ASPs by ~Rs2,083/tonne q/q to ~Rs63,682/tonne. On the cost front, elevated coking coal prices are likely to exert some pressure on margins. As a result, JINDALST’s EBITDA/tonne is expected to moderate on a y/y basis. However, at the sector level, EBITDA is still projected to witness a healthy growth of ~26.5% y/y, led by improvement in realizations.

Non-ferrous sector. While the situation at Novelis is expected to improve gradually, the overhang from the Oswego fire incident and ongoing US tariff concerns continues to persist. Volumes are expected to recover to ~0.84m tonnes, with the segment likely to report EBITDA/tonne of ~$449. HNDL is expected to witness a marginal decline in upstream volumes due to capacity constraints. Additionally, with ~64% of metal hedged at ~$2,807/tonne, the benefit of the recent sharp increase in spot aluminum prices is expected to be partially offset. As a result, upstream EBITDA/tonne is likely to improve modestly by ~$130 to ~$1,700/tonne. HCP reported MIC production volumes of 27,421 tonnes (up ~9% y/y), translating into a yield of ~0.75% v/s ~0.73% in FY25.

Other companies. JDSL is expected to report a ~3% y/y decline in volumes, primarily due to gas shortages, which are estimated to have impacted ~40,000 tonnes of production in Mar’26. Despite this, the company is likely to report a healthy EBITDA/tonne of ~Rs21,500. However, management commentary on gas shortage and volume/margin sustainability will be a key monitorable. Meanwhile, LLOYDSME has reported record volumes, which are expected to drive a sharp improvement in EBITDA (likely to increase ~7x y/y to over Rs20bn.)

Anand Rathi Research Team