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Motilal Oswal Report
JSW Steel Ltd. shares are likely to remain in focus after the brokerage Motilal Oswal reiterated a ‘Buy' rating on the stock, citing strong growth visibility backed by capacity expansion, improving cost efficiencies, and a rising share of value-added products.
The brokerage has set a target price of Rs 1,520 on the stock, implying an upside of about 19% from the current market price.
Motilal Oswal highlighted that JSW Steel is well-placed with new capacities coming on stream, strong domestic demand, and a rising share of value-added proportion in the sales mix. The recent sale of BPSL stake positions the company well to execute its various projects.
The company's focus on increasing the captive share of iron ore and improving coal linkages will support earnings.
Double-digit growth visibility
Going forward, the brokerage estimates double-digit revenue growth over FY27-FY28, driven by the ramp-up of new capacity and price recovery led by the safeguard duty.
Despite input cost volatility, Motilal Oswal believes Ebitda/tonne will rebound to ~Rs 14,000/tonne by FY28E on account of domestic steel price recovery, led by the safeguard duty.
As BPSL was transferred to JFE JV via a slump sale, the brokerage's FY27/28 earnings estimates exclude BPSL.
Valuation and outlook
At current levels, the stock trades at around 7.5x FY28 estimated EV/Ebitda, which the brokerage believes remains attractive given the earnings growth trajectory.
Overall, the brokerage maintains a bullish stance on JSW Steel, supported by strong growth visibility, margin expansion potential, and a robust balance sheet, making it a preferred play in the metals space.
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