Metals sector outlook improves as non-ferrous earnings lead recovery: Systematix

New Delhi: The outlook for India's metals and mining sector is improving, with non-ferrous companies likely to remain the key earnings drivers, while capacity expansion, volume recovery and improving realisations could support select primary steel producers, according to brokerage firm Systematix.

The brokerage expects companies with strong expansion pipelines, cost optimisation and operating leverage to outperform, although raw-material costs, commodity prices and geopolitical disruptions remain key risks.

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Systematix said the first quarter of FY27 delivered divergent trends across its metals and mining coverage. Non-ferrous companies led earnings growth, benefiting from favourable commodity prices, lower costs, stronger copper earnings and improved alumina realisations. Primary steel producers reported resilient margins despite seasonally weaker volumes and higher coking-coal costs, while mining and steel-pipe companies delivered mixed performances.

The overall EBITDA margin for the companies under Systematix's coverage increased to 21.6 per cent in 1QFY27 from 19.5 per cent in 4QFY26 and 18.6 per cent a year earlier. Non-ferrous companies recorded the strongest improvement, with margins rising to 23.2 per cent from 21.1 per cent sequentially and 17.8 per cent year-on-year.

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In mining, Systematix remains positive on NMDC, supported by incremental volumes from Deposit 4 and 13, mine debottlenecking and improved logistics. Coal India, however, faces weaker volumes and pricing pressure despite rising power demand, while MOIL remains a recovery play dependent on improving production and manganese realisations.

Systematix expects volume recovery, capacity expansion and operating leverage to support earnings, but steel realisations, coking-coal and base-metal prices, monsoon-related demand weakness and execution of new capacity will remain critical monitorables.