Synopsis: Brokerages remain positive on JSW Steel, supported by strong earnings momentum, improving volumes, lower debt and ongoing capacity expansion, while expecting operational improvements to support growth despite near-term pricing challenges.
The shares of this large cap company majorly engaged in the business of manufacture and sale of Iron and Steel Products, were in focus after the brokerages remain positive after Q1 FY27 result.
With the market capitalization of Rs. 3,08,836 Crores, the shares of JSW Steel Ltd were trading at around Rs. 1263 per share which is 5 percent discount from its 52 week high of Rs. 1328 per share and is trading at a P/E of 25.5 whereas industry P/E stands at 18.2
Q1 FY27 Result:
YoY analysis: Revenue from operations has increased from Rs. 43,147 Crores in Q1 FY26 to Rs. 47,364 Crores in Q1 FY27, up 9.7 percent. Operating profit has increased from Rs. 7,476 Crores to Rs. 9285 Crores, up 24 percent and net profit has increased from Rs. 2,209 Crores to Rs. 4,696 Crores, up 112 percent.
QoQ analysis: Revenue from operations has decreased from Rs. 51,180 Crores to Rs. 47,364 Crores, down 7.4 percent. Operating profit has increased from Rs. 8464 Crores to Rs. 9285 Crores, up 9.6 percent and net profit has decreased from Rs. 19,243 Crores( largely contributed by other income) to Rs. 4,696 Crores, down 75 percent
Jefferies: Strong Earnings Momentum and Expansion Drive Positive Outlook
Jefferies maintained its ‘Buy’ rating with a target price of Rs 1,650, with an upside potential of 30 percent from its CMP and continues to see JSW Steel as its top pick in the Indian metals sector. The brokerage raised its FY27–FY28 EPS estimates by 1–4 percent and expects earnings per share to triple between FY26 and FY29.
It highlighted that the company delivered its fifth consecutive quarter of double-digit EBITDA growth, with Q1FY27 EBITDA rising 38 percent year-on-year, exceeding its estimates by 20 percent . Jefferies expects quarterly EBITDA to increase from Rs 94 billion in Q1FY27 to an average of Rs 110 billion during the remaining quarters of FY27, representing 70 percent year-on-year growth. It also believes the company’s plan to double steelmaking capacity to 80 million tonnes by FY32 could position JSW Steel among the top three global steel producers.
Goldman Sachs: Volume Growth and Lower Debt Strengthen Growth Outlook
Goldman Sachs maintained its ‘Buy’ rating with a target price of Rs 1,525 with an upside potential of 20 from its CMP. It noted that India sales volumes increased 5.5 percent year-on-year to 6.3 million tonnes in Q1FY27, despite the 3 million tonnes per annum BF-3 furnace being temporarily non-operational and weak in the retail segment.
The brokerage expects stronger volumes even in the seasonally weaker Q2FY27, as the BF-3 furnace has now been commissioned and is expected to ramp up production. It also highlighted that the completion of the BPSL divestiture reduced net debt by Rs 77 billion quarter-on-quarter, bringing the net debt-to-EBITDA ratio down to 1.46x, well below management’s 2.5x through-cycle threshold.
Goldman Sachs added that capacity expansion and downstream capital expenditure remain on track and should support higher volumes and margins. Although it expects domestic steel spreads to soften by Rs 2,500–2,800 per tonne quarter-on-quarter in Q2FY27, it believes stronger H2FY27 volume growth will help offset the impact.
Conclusion:
Both Jefferies and Goldman Sachs remain positive on JSW Steel’s long-term outlook, supported by steady earnings growth, improving sales volumes, lower debt and ongoing capacity expansion. While steel prices may face some near-term pressure, both brokerages believe stronger production, operational improvements and planned investments will help offset these challenges.
They expect the company’s stronger balance sheet, expanding manufacturing footprint and consistent execution to improve its competitive position and support sustainable growth in the coming years.
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