Materials| Industrials |Commodities

Rahul Jain

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/arcelormittal-sa-8b816bb6-eb73-416f-a30a-56f93d1deb03" target="_blank" data-smartkarma-citation="entities:38577:1" rel="noopener">ArcelorMittal (MT US)</a> reported an EBITDA decline for the third year in a row to US$7b in CY24. Targets $0.4b/0.6b of $1.9bn of planned strategic EBITDA growth in 2025/2026.</li>
<li>Management has guided a slightly positive apparent global demand growth 2.5-3.5% ex China. Expects restocking demand in Europe. </li>
<li>Trades at 0.5x P/B vs 2-3x P/B for Indian steel mills <a href="https://www.smartkarma.com/entities/jsw-steel-ltd" target="_blank" data-smartkarma-citation="entities:18561:1" rel="noopener">JSW Steel Ltd (JSTL IN)</a> , <a href="https://www.smartkarma.com/entities/tata-steel-ltd" target="_blank" data-smartkarma-citation="entities:20934:1" rel="noopener">Tata Steel Ltd (TATA IN)</a> , <a href="https://www.smartkarma.com/entities/jindal-steel-power-ltd" target="_blank" data-smartkarma-citation="entities:6614:1" rel="noopener">Jindal Steel &amp; Power (JSP IN)</a> </li>
</ul>



ArcelorMittal (MT US) reported an EBITDA decline for the third year in a row to US$7b in CY24. Targets $0.4b/0.6b of $1.9bn of planned strategic EBITDA growth in 2025/2026.
Management has guided a slightly positive apparent global demand growth 2.5-3.5% ex China. Expects restocking demand in Europe. 
Trades at 0.5x P/B vs 2-3x P/B for Indian steel mills JSW Steel Ltd (JSTL IN) , Tata Steel Ltd (TATA IN) , Jindal Steel &amp; Power (JSP IN) 


ArcelorMittal (MT US) Is Deep Discount to Indian Mills Warranted?

Nippon Steel Corporation / Equity Bottom-Up

<ul>
<li>Nippon Steel targets over 100 Mt capacity by 2030, focusing on global growth as Japan’s domestic demand shrinks.</li>
<li>It plans to acquire U.S. Steel for $14.9B and expand in India via AMNS joint ventures.</li>
<li>FY24 profit rose 36%, but export reliance, ESG lag, and U.S. deal hurdles pose risks.</li>
</ul>


Nippon Steel targets over 100 Mt capacity by 2030, focusing on global growth as Japan’s domestic demand shrinks.
It plans to acquire U.S. Steel for $14.9B and expand in India via AMNS joint ventures.
FY24 profit rose 36%, but export reliance, ESG lag, and U.S. deal hurdles pose risks.


Nippon Steel (5401 JP): Navigating Decline at Home, Expanding Abroad

<ul>
<li>Q1 showed resilient performance; Q2 EBITDA to rise on European spread recovery, healthy orders, and stable North America.</li>
<li>Over 60% of future capex targets India; Hazira and Visakhapatnam expansions drive sharp volume and margin growth.</li>
<li>Stock trades at deep 60–70% discount to Indian steelmakers despite growing India focus and structurally stronger EBITDA.</li>
</ul>


Q1 showed resilient performance; Q2 EBITDA to rise on European spread recovery, healthy orders, and stable North America.
Over 60% of future capex targets India; Hazira and Visakhapatnam expansions drive sharp volume and margin growth.
Stock trades at deep 60–70% discount to Indian steelmakers despite growing India focus and structurally stronger EBITDA.


ArcelorMittal: Strengthening Core, Pivoting to Growth

<ul>
<li>JSW Steel has grown its domestic steelmaking capacity at CAGR of 14% over the last 2 decades (2x industry) and at 25% lower costs</li>
<li>Gradual capacity ramp-up at recently completed expansion at Vijayanagar (5m) and actively pursuing 10-15mt of new capacity additions over the next 3-5 years</li>
<li>Valuations: JSW Steel trades at premium to its 5yr average EV/EBITDA likely due to a) impending imposition of a 12% safeguard duty b) superior capital allocation etc.</li>
</ul>


JSW Steel has grown its domestic steelmaking capacity at CAGR of 14% over the last 2 decades (2x industry) and at 25% lower costs
Gradual capacity ramp-up at recently completed expansion at Vijayanagar (5m) and actively pursuing 10-15mt of new capacity additions over the next 3-5 years
Valuations: JSW Steel trades at premium to its 5yr average EV/EBITDA likely due to a) impending imposition of a 12% safeguard duty b) superior capital allocation etc.


JSW Steel: Low Cost Capacity Expansion Underpin Premium Valuations

<ul>
<li>NMDC has aggressive growth plans to double its output over the next 5-6 years. Near-term guidance is also strong with plans to grow at &gt;10% in FY26.</li>
<li>New levies, delays in execution and lacklustre pricing outlook remain a key concern. However, well-aligned to surging demand from steadily growing domestic steel industry.</li>
<li>Valuations: Trades at 9x TTM PE which is a slight premium to 5 yr average. Stock offers about 4-5% dividend yield and has payout ratio of &gt;30% provides downside support. </li>
</ul>


NMDC has aggressive growth plans to double its output over the next 5-6 years. Near-term guidance is also strong with plans to grow at &gt;10% in FY26.
New levies, delays in execution and lacklustre pricing outlook remain a key concern. However, well-aligned to surging demand from steadily growing domestic steel industry.
Valuations: Trades at 9x TTM PE which is a slight premium to 5 yr average. Stock offers about 4-5% dividend yield and has payout ratio of &gt;30% provides downside support. 


NMDC: Proxy to Rising Steel Demand with a High Dividend Yield.

United States

ArcelorMittal produces steel. The Company manufactures cold rolled, electrogalvanized and coated steels, slabs, bars, and wire rods. ArcelorMittal serves customers worldwide.

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ArcelorMittal (MT US)