The domestic brokerage house, Motilal Oswal Financial Services, has maintained its Buy call on JSW Steel, with a target price of Rs 1,150. It is betting on the company’s expansion plan, healthy realisation, and muted input costs.
Motilal Oswal said that despite near-term headwinds from declining metal prices, JSW Steel’s expansion positions it well for long-term growth, which will support volume growth of 8-10% YoY for FY26-27E. Plus, it also thinks that considering the healthy realization and muted input costs, EBITDA is likely to clock a 15% compounded annual growth rate by FY27.
It also estimates that JSW Steel may generate strong cash flow, which can be utilised to fund the expansion plan and for deleveraging. The company is expanding its Vijayanagar integrated facility by 5 mtpa and other expansions are also planned.
Further, the company has implemented a comprehensive cost-reduction strategy to improve profitability and competitiveness. This is to optimise raw material sourcing, enhance logistics efficiency, integrate renewable energy, and improve operational performance.
“While near-term margins are expected to be muted, double-digit revenue growth is anticipated in FY26E, driven by the ramp-up of new capacity and price recovery,” said Motilal Oswal in a research note.
The company posted a 70.3% year-on-year fall in its consolidated profit to Rs 717 crore for the third quarter of FY25 on lower steel prices. In the same period a year ago, it posted a net profit of Rs 2,415 crore. Total revenue stood at Rs 41,378 crore, down 1.3% YoY from Rs 41,940 crore in Q3 FY24
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