India's metal and mining companies are bracing for a high-stakes Q3 FY26 earnings season, set to kick off next week. Hindustan Zinc and Jindal Stainless are scheduled to lead the pack during the January 19-21 window. They will be followed by industry heavyweights Tata Steel and JSW Steel, whose report cards are expected between the final week of January and early February.

While the broader sector is coming off a strong post-monsoon demand quarter, analysts at Systematix Institutional Equities predict a mixed outlook: a booming non-ferrous segment and a primary steel sector struggling with a major margin squeeze.

Non-ferrous becomes the star performer

The Sytematix report positions the non-ferrous segment as the clear outperformer for this quarter. Analysts are bullish on Vedanta (VEDL) and Hindustan Zinc (HZL), projecting a surge in profitability driven by a "perfect storm" of global supply disruptions and geopolitical tensions that have pushed base and precious metal prices upward.

Hindustan Zinc received tailwinds from the exponential rise in silver prices, which have jumped 73.6% year-on-year (YoY) and nearly 40% sequentially. For Vedanta, profitability growth is expected to be supported by higher volumes across its aluminium, zinc, and power segments, helping to offset a relatively weaker show in its oil and gas business.

However, the outlook for Hindalco is more tempered. While it benefits from higher aluminium prices, analysts expect the impact of a fire at its Novelis NY plant to spill over into this quarter, potentially moderating its growth trajectory. Similarly, NALCO is expected to show more moderate growth due to a high base effect from the previous year.

Ferrous segment faces a volume-price paradox

In the primary steel space, the story is one of rising volumes but shrinking margins. Despite robust domestic demand, the sector is grappling with a quarter-on-quarter (QoQ) margin contraction.

The primary headwinds include:

• Pricing pressure: Hot rolled coil (HRC) prices have dipped roughly 5.3% sequentially, weighed down by global pricing weakness and surplus domestic supply.

Among the players, analysts view Tata Steel and JSW Steel more favourably than SAIL. Tata and JSW are expected to use superior sales mixes and aggressive cost-control measures to mitigate the fall in steel realisations. In contrast, SAIL faces a decline in profitability due to stagnant capacity and the lack of volume growth to cushion the price fall.

Mining and pipes

The mining sector remains a "mixed bag". NMDC and MOIL are tipped to shine, with NMDC benefitting from a sharp rise in volumes and steady pellet exports. Conversely, Coal India continues to be viewed with caution due to declining offtake and a bleak growth outlook compared to its peers.

In the steel tubes and pipes segment, Welspun Corp (WLCO) is emerging as a top pick with a projected 38% YoY EBITDA growth, marked by a surge in its US operations and a diversified product portfolio. While the industry faces some sluggishness in government-funded projects (impacting DI pipe volumes for players like Jindal SAW), the strong demand for structural steel in industrial infrastructure remains a silver lining.

Overall, while the Nifty Metal index has already seen a rally of close to 38% in the last one year, the Q3 results could act as a crucial filter, separating companies with genuine volume and margin levers from those merely riding the commodity wave.

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