JSW Steel's Superior Execution, Value-Added Special Products To Drive Growth Says PL Capital— Maintains Hold

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PL Capital Report

We recently met the management of JSW Steel Ltd. to gain insights into domestic steel demand and the company’s initiatives to improve margins. Newly commissioned 5mtpa at JVML has been ramping up well over the last few months.

Brownfield Phase III 5mtpa expansion at Dolvi is on track to be commissioned by Sep’27, while in the near term, BF#3 at Vijayanagar is expected to undergo planned six-month shutdown to upgrade capacity by 1.5mtpa by end of FY26.

With another 0.5mtpa debottlenecking, JSW Steel would reach 36.4mtpa by FY26E.

We expect JSW Steel to continue to capture market share as domestic demand improves aided by GST rationalization.

JSW Steel remains India’s fastest growing steel producer with its superior execution capabilities. Over the last five years, its value added special products volumes improved from 7.2mt to 15.4mt while its India crude steel capacity grew at 14% CAGR to 34.2mtpa – highest amongst peers.

Several countries have witnessed a boom in steel demand post reaching 100kg per capita consumption mark, and India is expected to follow suit in the next few years.

We expect JSW Steel to be a prime beneficiary of this demand acceleration as it has outlined several capacity expansion avenues over FY25- 31E, to reach 50 mtpa mark.

Although steel prices declined sharply post May’25, expected demand uptick post monsoon, safeguard extension and China’s policies would improve situation.

We cut FY26/27E Ebitda by ~4%/5% adjusting for near-term pricing weakness and introduce FY28 Ebitda estimates. We expect JSW Steel to deliver strong 26% Ebitda CAGR over FY25-28E on a low base.

At current market price, the stock is trading at 8x/7.4x EV on FY27/28E Ebitda.

We maintain ‘Hold’ rating with revised target price of Rs 1,064 (Rs 1,068 earlier), valuing the company at 7.5x EV/Sep’27E Ebitda (rolling forward from Mar’27).

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