The shares of JSW Steel rose more than 1 percent on December 5, extending gains for the second consecutive session as brokerage issued bullish notes for the stock. This comes after the company announced a joint venture with Japan's JFE Steel.
The shares have now risen over 2 percent in two days, after falling 1.5 percent on the day the JV was announced (December 3).
JFE Steel on December 3 had announced that it will form 50:50 joint venture with JSW Steel for transfer of Bhushan Power & Steel integrated steel facility. JFE will invest Rs 15,750 crore (270 billion yen) in JV for transfer of BPSL integrated steel facility.
JSW had acquired Bhushan Power & Steel (BPSL) in 2021 through an IBC process. "What was a 2.75 mtpa sick unit now stands proud as a profitable company with an enhanced capacity of 4.5 mtpa, employing 25,000 people," the company said.
Through this transaction, JSW will monetise part of its holding in BPSL, in order to accelerate the growth of the company, the firm said. The cash proceeds received from the transaction will strengthen the company's balance sheet even further and provide a clear runway for growth that will create significant value for its stakeholders, it said.
Motilal Oswal Financial Services said JSW Steel's partnership will help reduce debt by Rs 35,000 crore and focus on capacity expansion. The domestic brokerage said that the restructuring and JV collectively will allow the company to monetize a significant portion of the value created through the turnaround of BPSL. This will let JSW Steel reduce debt and focus on the long-term growth plan of expanding capacity to 50 mtpa.
"We remain positive on the company outlook, estimating double-digit revenue growth in FY26/FY27, driven by the ramp-up of new capacity and price recovery. Further, as input costs are expected to remain soft, we believe EBITDA margin will rebound to 18-19% in FY26/FY27 (~INR12,000/t in FY26E and ~INR13,500/t in FY27E) on account of domestic steel price recovery, led by safeguard duty. The recent development will support JSTL’s deleveraging plan. Its net debt-to-EBITDA ratio declined to 2.97x as of 2QFY26, which we expect to decline to 1.7x by FY27E, supported by robust operating profit," Motilal said.
The domestic brokerage kept a 'Buy' rating on the stock, with a target price of Rs 1,350 per share. This implies an upside potential of nearly 16 percent from the stock’s current market price.
JM Financial said that the transaction boosts JSW Steel's liquidity and enhances balance sheet capacity for organic and inorganic growth, supporting its long-term capex roadmap toward 50 mtpa by FY31. "Management has emphasised that the JV will remain independent rather than merge with JSW Steel, ensuring governance clarity, financial ring-fencing and aligned partner participation. JSW will continue as co-owner, operator and project executor, retaining control over value creation," it said.
The domestic brokerage concluded that the deal strengthens JSW’s balance sheet, accelerates its long-term growth pathway and fits JFE’s global expansion strategy. JM Financial kept a 'Buy' call on the stock and a target price of Rs 1,350 per share, implying an upside potential of around 16 percent from the stock’s current market price.
Emkay Global said that the restructuring unlocks value from BPSL and delivers a sharp balance-sheet reset. "This monetization step also delivers a material balance-sheet benefit, with JSTL achieving Rs370bn of deleveraging following the sale and associated debt transfer. We understand immediate deleveraging and getting prepared for the next leg of capacity expansion cycle—at a time when steel consumption growing at 8-9% pa is expected to push the market into a deficit in the next 2–3 years— as key rationale for this transaction," the domestic brokerage said.
It kept an 'Add' rating on the stock, with a target price of Rs 1,200 per share. This implies an upside potential of nearly 3 percent from the stock’s current market price.
Yes Securities in its note said that the move "creates a clean, ring-fenced platform for the JV and unlocks significant embedded value within BPSL while setting the stage for the next leg of expansion". "The new JV will carry ~Rs 215bn of ring fenced, non-recourse debt, significantly strengthening JSW Steel’s capital structure and enhancing its ability to fund ongoing capex at Dolvi, Vijayanagar, Odisha Phase-1, and Salav," the domestic brokerage said.
It kept a ‘Neutral’ call on the stock, with a target price of Rs 1,228 per share. This implies an upside potential of more than 5 percent from the stock’s current market price.
Elara Capital said that the joint venture with JFE Steel Corporation of Japan brings together the execution strength of JSW Steel and the manufacturing technology expertise of JFE Corporation, enabling a wider portfolio of value-added steel products.
However, the domestic brokerage advised caution as it believes that the recent positives have already been priced in the stock price. It maintained its ‘Sell’ rating on the stock with a target price of Rs 994 per share. This implies a downside potential of nearly 15 percent from the stock’s current market share.
JSW Steel shares have fallen nearly 2 percent in the past five days, but gained more than 20 percent in the past six months.
The stock is up around 29 percent in 2025 so far. Its P/E ratio currently stands at around 51.
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