Metal Stocks in India

What are metal stocks?

Metal and mining stocks include steel makers, producers of aluminium, copper, zinc and other non-ferrous metals, ferro-alloy makers, and companies that mine iron ore, coal and other minerals. Ferrous metals are iron and steel; non-ferrous metals are everything else, such as aluminium, copper and zinc.

Metals are commodities: their prices are set largely by global supply and demand and quoted on international markets such as the London Metal Exchange (LME). Indian metal companies therefore follow global cycles - and China, which produces and consumes about half of the world's steel and many other metals, has an outsized influence.

What moves metal stocks

Global metal prices

Steel, aluminium, copper and zinc prices can move sharply, and metal company profits move with them.

China

When China's economy or construction sector slows, it exports more metal and prices fall worldwide; stimulus in China tends to lift prices.

Raw material costs

Iron ore and coking coal for steel, alumina and power for aluminium. The spread between metal prices and raw material costs decides margins.

Domestic demand and trade policy

Infrastructure, housing, autos and manufacturing drive demand in India, and import duties or safeguard measures can protect domestic prices.

What to check before investing in metal stocks

EBITDA per tonne

Operating profit per tonne of metal sold - the standard way to compare metal producers.

Raw material integration

Companies with their own iron ore mines, coal or captive power are less exposed to raw material price spikes.

Debt

Metal plants are expensive to build. High debt is dangerous in a business whose profits swing with the cycle; net debt to EBITDA is a common check.

Valuation through the cycle

Metal stocks often look cheapest on a price-to-earnings basis at the peak of the cycle, when profits are highest - and most expensive at the bottom. Many investors look at EV/EBITDA and price-to-book instead.

Risks to know

Metal stocks are among the most cyclical on the market: a fall in global prices can cut profits sharply within a few quarters. Cheap imports, rising raw material costs, heavy debt taken on for expansion, and environmental and mining regulations are further risks.

How to invest in metal stocks

1. 1

   Open a demat and trading account

   A demat account holds your shares electronically; a trading account lets you buy and sell them. With GoPocket you can open both online in a few minutes with your PAN, Aadhaar and bank details.

2. 2

   Add money

   Transfer funds to your trading account by UPI or net banking.

3. 3

   Research the company

   Pick a company from the list above and open its page to see its share price chart, financial performance and shareholding before you decide. Compare it with other metal stocks on business quality, debt, growth and valuation.

4. 4

   Place your order

   Search for the stock in the GoPocket app or web platform, choose the quantity, and place a delivery order to hold the shares in your demat account. A limit order lets you set the most you are willing to pay.

5. 5

   Track and review

   Follow the company's quarterly results and news. Spreading your money across several companies and sectors reduces the damage if one investment goes wrong.

Terms used on this page

LTP

Last traded price - the price at which the stock last changed hands. The figure below it is the change from the previous day's close.

Market cap

Market capitalisation: share price multiplied by the number of shares issued. It measures a company's size in the market and is shown here in rupees crore (1 crore = 1,00,00,000).

Cap band

Whether a company is large, mid, small or micro cap, based on its market capitalisation. Larger companies tend to be less volatile.

Sector and industry

The NSE groups companies into broad sectors (such as Financial Services) and narrower industries within them (such as Banks), based on what they mainly do.

Trading graph

How the share price has moved during the latest trading session, from the 9:15 open to the 3:30 close. The dashed line is the previous day's closing price.