Macquarie Backs Tata Steel Over Hindalco in Metals Recovery

Macquarie has issued a constructive outlook on Indian metals, naming Tata Steel and Hindalco as key beneficiaries of an improving cycle, while signaling Tata Steel as the stronger near-term earnings recovery play. The brokerage's view rests on the metals cycle turning supportive, a condition that historically lifts margins across steel and aluminium producers, though the pace and magnitude differ by commodity and balance sheet position. Tata Steel's recovery thesis is tied to operational leverage, as volumes and realisations improve, earnings tend to amplify disproportionately given the company's fixed-cost base, particularly across its European operations which have weighed on consolidated margins. Hindalco, while also a beneficiary, faces a different earnings profile shaped by its Novelis subsidiary and global aluminium price dynamics. Investors will watch for updated target prices from Macquarie as the cycle thesis plays out, with quarterly earnings from both companies serving as near-term validation points for the brokerage's stance on relative positioning.