Shares of metal companies such as Tata Steel NSE -0.05 %,Hindalco NSE -1.26 %, and National Aluminium NSE 2.87 % fell up to 10% in the last week amid recessionary fears in the US, low demand in China, and poor Q3 results. Shares of Hindustan Zinc NSE -1.18 %, Steel Authority of India SAIL 83.35-1.20 (-1.42%), and Vedanta NSE -0.63 % also declined up to 4% in the week gone by.
“Markets had been overly optimistic with the Chinese reopening considering China accounts for 50% of the global steel demand, but the post-Covid China scenario is depressing as the infra developments, residential demand, and capex will be materially lower than going into Covid – times have changed, and the market is realising this,” he added.
In Q3, steel companies also saw a decline in their profit, which led to a further fall in stock prices. Tata Steel in Q3 FY23 reported a consolidated net loss of Rs 2,224 crore for the December quarter, while the company had posted a profit of Rs 9,572 crore in the last-year same period.
Meanwhile, JSW Steel also reported an 89% YoY fall in net profit at Rs 490 crore for the three months ended December 2022. Vedanta also reported a 42% YoY decline in its consolidated net profit to Rs 3092 crore for the quarter ended December 31, 2022.
As per Trendlyne data, the highest target price for Vedanta goes up to Rs 551, while the average target price estimate is Rs 367, which shows an upside potential of 18.2% from the current market prices.
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