JSW Steel Gets 'Reduce' Rating As Dolat Capital Initiates Coverage After Q3 Results

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Dolat Capital Report

We are initiating coverage on JSW Steel Ltd. with a 'Reduce’ rating and target price of Rs 950 valuing at 7.6x FY27E EV/Ebitda basis. JSW Steel has become India’s largest producer of steel, boasting an installed capacity of 35.7 mtpa as of end-Q3 FY25.

The company aims to increase its total installed capacity to 43.5 mtpa by H1 FY28 and further raise it to 51 mtpa by FY31.

The management targets a consolidated sales volume of ~27 metric tonne in FY25. We believe that the ramp-up of the newly commissioned 5 mtpa Vijayanagar and 1.5 mtpa BPSL expansions will enhance the topline, while improvements in the product portfolio through a greater proportion of value-added & specialty products will support margins. Q3 FY25 witnessed the best-ever domestic quarterly sales volume.

Though we like the company’s volume expansion plan, product mix improvement initiatives and raw material securitization, we await better entry levels. We expect Revenue/Ebitda/profit after tax compound annual growth rate of 12/18/32% over FY25-27E. Initiate ‘Reduce’ rating.

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