Steel sector set for structural re-rating, says Kotak’s Sumangal Nevatia

India’s steel sector is entering a phase of structural strength driven by high entry barriers, robust demand growth, and healthier balance sheets, according to Sumangal Nevatia, Director at Kotak Institutional Equities.


Speaking to CNBC-TV18, Nevatia said that despite near-term noise around safeguard duties and policy changes, the medium-term investment case for Indian steel remains compelling.

Nevatia noted that the government’s withdrawal of quality control orders—originally imposed as non-tariff barriers—will remove friction in imports and ease supply bottlenecks. While this could soften domestic steel prices, he believes the impact will be limited.

On the contentious provisional safeguard duty, Nevatia highlighted that the case for extension is weak compared to 2016–17, when Indian steelmakers were under financial stress. Imports have risen only marginally on a large base, and India’s ongoing FTA discussions make a fresh duty uncertain. Kotak estimates a 5-7% earnings cut for the sector for FY26 if the duty does not come.

Despite this uncertainty, Nevatia remains constructive on the sector. He pointed out four pillars supporting a structural re-rating: high entry barriers, 8-9% annual demand growth, favourable policy support, and strong corporate balance sheets after several good earnings years. With very few greenfield steel plants built in the past decade, market consolidation strengthens the pricing power of large players.



Kotak Institutional Equities prefers Jindal Steel & Power(JSPL) in the steel pack, supported by its strong balance sheet and ongoing capacity expansions. With JSW Steel already trading near its fair value, JSPL stands out with a more attractive risk-reward opportunity in the current cycle.

For full interview, watch accompanying video