JSW Steel Q4 Review: Morgan Stanley Says Results In Line; BPSL Overhang Persists

Morgan Stanley has maintained its 'equal-weight' rating on JSW Steel Ltd. following the company's March-quarter earnings, which were broadly in line with expectations.

The brokerage noted that while standalone earnings before interest, taxes, depreciation, and amortisation at Rs 5,070 crore were 5% below Morgan Stanley's forecast, consolidated Ebitda at Rs 6,380 crore came in 3% below Bloomberg estimates and above Morgan Stanley's estimates.

The overseas subsidiaries dragged performance, reporting Rs 130 crore in Ebitda versus Morgan Stanley's estimate of Rs 400 crore, largely due to weaker realisations. However, management remains optimistic about domestic steel demand, guiding for 8-10% growth in fiscal 2026, with a target of a 10% volume increase, the note said.

Net debt fell to Rs 76,600 crore from Rs 80,900 crore in the previous quarter, helped by working capital release as per the note.

Morgan Stanley believes that one of the key overhangs is JSW's Bhushan Power & Steel unit. While the company has implemented a resolution plan, legal uncertainties continue. Discussions with legal advisors are ongoing, the brokerage said.

Ebitda per tonne stood at Rs 8,800, slightly ahead of estimates, supported by better operating costs and lower raw material costs. Domestic steel volumes grew 12% year on year. The company expects fiscal 2026 capex to be in the range of Rs 20,000–21,000 crore.

JSW Steel reported a consolidated profit after tax of Rs 1,500 crore, higher than Morgan Stanley’s estimate of Rs 1,170 crore, aided by a lower effective tax rate, said the brokerage.