Rakesh Arora, Founder of GoIndiaStocks.com, advised investors to avoid fresh buying in steel stocks at current valuations despite strong Q4 FY26 earnings from Indian steel companies. According to reports from CNBC TV18, Arora noted that while strong quarter four earnings could continue into Q1 FY27 due to higher steel prices, margins may be nearing their peak. He emphasized that valuations across major steel stocks already reflect much of the upside, with new positions not recommended at current levels as the sector is trading closer to peak profitability.
Regarding specific steel companies, Arora maintained that JSW Steel remains one of the preferred names in the sector due to its capacity expansion plans and cost efficiencies, as reported by CNBC TV18. However, he cautioned that margins could soften after the current quarter. For Tata Steel, he noted that the company's European operations are no longer a major driver of value as domestic capacity expansion has become more significant. He added that sustainable improvement in Europe may remain difficult until operations move away from older blast furnace-based production.
Arora has turned cautious in the aluminium space and recommended profit booking after the recent rally, according to CNBC TV18 reports. He stated that aluminium is trading way beyond its fair value, with prices currently around $3,600 per tonne against his estimated fair value of about $2,600. The analyst warned that additional supply from Indonesia and planned capacity additions by Chinese producers could pressure prices over the medium term, advising investors to book profits after the recent rally.
Despite the cautious stance on steel and aluminium, Arora highlighted macro support for metals from a weaker US dollar, which improves realisations for commodity producers globally, as reported by CNBC TV18. He emphasized that AI-linked demand has become a major driver for base metals, particularly copper, and future investment trends in AI infrastructure could influence commodity prices going forward. For existing steel stock holders, he suggested they may continue with positions for limited upside but should remain careful as consensus target prices have not moved significantly higher after earnings upgrades.
