'Buy' JSW Steel Shares Maintains Motilal Oswal On Favorable Macros, Robust Long-Term Outlook

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

Motilal Oswal Report

JSW Steel Ltd.’s Ebitda moderated to Rs 8,659/tonne in FY25 (from Rs 11,395/tonne in FY24), primarily due to the weak net sales realisation caused by higher cheap imports in India. However, the muted input cost (especially coking coal) partially offset the impact.

Going forward, we estimate double-digit revenue growth in FY26/FY27, driven by the ramp-up of new capacity and price recovery. Further, as input costs are expected to remain soft, we believe Ebitda margin would rebound to 18-19% in FY26/FY27 (~Rs 12,000/tonne in FY26E and ~Rs 13,500/tonne in FY27E) on account of domestic steel price recovery led by safeguard duty.

Strong margins will enable JSW Steel to generate cash flow from operation of Rs 620 billion, which can be utilized to fund the expansion plans of Rs 350 billion (Rs 150-200 billion each) over FY26- 27E and any potential deleveraging efforts.

JSW Steel’s net debt-to-Ebitda ratio declined to 3.34x as of Q4 FY25, which we expect to decline to 1.7x by FY27E, supported by robust operating profit.

At current market price, JSW Steel trades at 7.6x FY27E EV/Ebitda. We reiterate our Buy rating on the stock with a target price of Rs 1,180 (premised on 8.5x EV/Ebitda on FY27 estimate).

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.