'Buy' Jindal Steel Shares Maintains Motilal Oswal, Says New Capacity Addition To Drive Earnings

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Motilal Oswal Report

Jindal Steel and Power Ltd.'s ongoing capacity expansion is expected to increase crude steel capacity by 65% to 15.6 million tonnes per annum, primarily supporting topline growth.

Additionally, the ramp-up of existing coal mines, the commencement of the Utkal block (C and B1 & B2), the slurry pipeline, and the ACPPII commissioning are expected to lower coal costs and support margins.

Further, the company’s focus on improving the VAP share (CRM complex + VAP enhancement project) will support NSR.

JSPL has followed a prudent deleveraging policy, which has helped the company strengthen its balance sheet. With a strong free-cash-flow, we expect the company to maintain its net debt/Ebitda below ~1.5x, even while undertaking ongoing and proposed capex.

At current market price, the stock trades at 6.9x EV/Ebitda and 1.7x P/B on the FY27 estimate. We reiterate our Buy rating on JSPL with a target price of Rs 1,200, based on 8x EV/Ebitda on FY27 estimate.

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