Buy Jindal Steel; target of Rs 1230: Anand Rathi

Anand Rathi's research report on Jindal Steel

Having commenced operations at its 3m tonne steel melting shop (SMS), Jindal Steel is on track to expand it by a further 3m tonnes, taking total installed capacity to 15.6m. It has also commissioned the Bhagavati Subhadrika BF-2 (first hot metal tapping achieved) and BOF-2 in Sep’25 at Angul. The first module of the 525MW power plant is expected to be synchronized with the grid in Q3, while commissioning of the second module is in progress. The Utkal B1 coal block would start contributing from Q4. Management maintained its FY26 guidance of 9–10m tonnes production and 8.5–9m tonnes sales, as operations at Angul gain traction. The share of flat products, now 49% (up from 45% in Q1), is expected to rise further. With value-added products at 73% of sales volumes, the company enjoys one of the highest VAP contributions among tier-I mills. While coal costs are likely to rise $3–5/tonne in Q3, the company expects 2–3% savings across the cost structure. However, given that sales have not exceeded 2m tonnes in two quarters, we expect FY26 volumes around the lower end of the guidance.

Outlook

Hence, we trim our FY26 volume guidance 2.4%. In line with softer steel prices and higher coal costs, we lower our FY26e EBITDA 2.8%. Nevertheless, with Angul ramping up steadily, we raise our FY27e/FY28e EBITDA 4%/5.6%. We are positive on the company’s growth prospects and reiterate our Buy recommendation with a revised target price of Rs 1,230.

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