JSW Steel Q1 Results Review: Systematix Maintains 'Buy', But Cuts Target Price — Here's Why

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.

Systematix Report

We have revised our FY26/FY27 Ebitda estimate lower by 8%/9%, factoring in a mix of revised assumptions around prices, volumes, and raw material integration. JSW Steel Ltd. has consistently met its guidance with timely project execution, favored by a uniform focus on backward integration and better VASP mix.

We estimate JSW Steel to deliver 12%/33%/95% revenue/Ebitda/PAT CAGR over FY25- FY27 with Ebitda margins growing from 13.6% to an estimated 19.4% in FY27.

Enhancement of captive iron ore and coking coal capacities, upcoming iron ore beneficiation units, and increasing share of renewable energy (RE) in its power mix demonstrate JSW Steel’s efforts to shield its margin from commodity price volatility.

Healthy cash flow generation and improved leverage would reflect in better return ratios for the company. JSW Steel, which has historically traded at higher valuations compared to its peer, commands a premium for its largest market share as well as for its fastest growing steel capacities.

We believe JSW Steel is likely to maintain its valuation premium with JSW Vijayanagar Metallics Ltd. commissioning underway and existing capacities slated for upgradation while having already started other brownfield/greenfield expansions forming a part of its next phase of growth.

We value JSW Steel at 9x FY27E EV/Ebitda, arriving at a revised target price of Rs 1,187/share (Rs 1,233/share earlier), implying a 15% upside from current market price and maintain Buy rating on the stock.

Safeguard duty implementation has been positive for the steel sector re-rating, as per expectations. Rampant Asian steel imports to India remain a risk. Maintain Buy.

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.