Buy JSW Steel; target of Rs 1100: Motilal Oswal

Motilal Oswal is bullish on JSW Steel recommended buy rating on the stock with a target price of Rs 1100 in its research report dated September 13, 2024.

Broker Research

September 16, 2024 / 14:21 IST

Buy

26 Aug, 2025 12:21

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Motilal Oswal's research report on JSW Steel

The domestic steel demand is expected to be robust, driven by significant capex toward infrastructure development. The capacity expansion of JSW Steel (JSTL) is on track, positioning it well to capitalize on emerging opportunities. We expect +9% YoY (26mt) volume growth in FY25 and +8% YoY (28mt) in FY26E. The metal prices in both domestic and global markets have corrected significantly. Domestic HRC and CRC declined 4-5% QoQ in 2QFY25. Moreover, global steel prices are trending downward due to muted global demand and Chinese oversupply. Margins in the near-term could be under pressure due to lower realizations, which would more than offset the decline in input costs. Going ahead, we expect a double-digit revenue growth in FY26E owing to price recovery and capacity ramp-up, which would drive the EBITDA close to ~INR14,500/t. JSW Steel, a leading integrated steel producer with robust iron ore linkages, currently meets around 35% of its iron ore needs through captive mines, with plans to increase this in the future. In 1QFY25, the VAP share stood at 64% of the total volumes. Post the expansions, management foresees it to moderate but aims to maintain the VAP share >50% in the long term.

Outlook

At CMP, JSTL trades at 7x FY26E EV/EBITDA. We reiterate BUY on JSTL with a revised TP of INR1,100 (premised on 7.5x FY26E EV/EBITDA).

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