Jindal Steel & Power vs Jindal Stainless: The shares of various steel companies rallied in the financial year 2020-21 as they announced record earnings because of volume growth and margin expansion.

The steel stocks are in focus again with many companies giving multi-bagger returns to their shareholders. Are you eying any steel stock? How about the two Jindal companies? But which one of the two?

In this article, we’ll conduct a comparative analysis of Jindal Steel & Power vs Jindal Stainless, the two steel giants of the O.P. Jindal legacy.

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Jindal Steel & Power vs Jindal Stainless

We’ll begin our comparative study by reading about the two companies and understanding the differences between their business, scale and leadership. After that, we’ll equip ourselves with a brief overview of the steel sector.

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Next, we’ll race through the financials of the two stocks to arrive at their future plans. A summary concludes the article at the end.

Jindal Steel & Power vs Jindal Stainless – Company Overview

Jindal Steel & Power and Jindal Stainless were both promoted by the late Om Prakash Jindal (O.P. Jindal). He structured the Jindal Group such that Naveen Jindal got control of Jindal Power & Steel while Jindal Stainless landed in the hands of Ratan Jindal. Let us now read about both companies. 

Jindal Steel & Power 

Jindal Steel & Power vs Jindal Stainless - Jindal Steel and Power Logo

Jindal Steel & Power Ltd. (JSPL) was established in 1952 as a small steel manufacturing facility in Haryana. Over the last 70 years, the company has grown into one of the largest steel producers globally. 

JSPL is an integrated-steel manufacturer undertaking end-to-end activities from the mining of coal and iron-ore to the production of iron, liquid steel and finished steel. Furthermore, it has captive power plants for fulfilling its power requirements.

It has a total iron-making capacity of 10.42 and a liquid steel production capacity of 9.16 MTPA. Jindal Steel produces TMT rebars, plates & coils, sheet piles, round bars, railroad bars, wire rods, and other steel products.

Its steel operations are backed by its iron ore mines and coal mines, which meet nearly 60% of its total iron ore needs and 50% of its coking coal needs. The steel giant earns roughly 70% of its revenue from India and the balance from exporting its products.

Its steel and captive power operations are mostly located in Odisha and Chhattisgarh with coal and iron ore assets spread across multiple countries. 

Jindal Stainless

Jindal Stainless Logo

Set up in 1970, Jindal Stainless Ltd. (JSL) is the top stainless steel producer in the country and one of the top five producers globally (ex-China). In terms of market capitalization, at Rs 30,000 crore, it is half the size of Jindal Steel & Power which is valued at Rs 62,500 crore.

JSL operates two stainless steel production plants in Haryana and Odisha. In addition, it also owns an overseas site in Indonesia which services the demand in South-East Asia and neighbouring regions.

It manufactures a wide variety of products such as stainless steel slabs, coils, plates, sheets, precision strips, and more. It has a total steel melting capacity of 3MTPA. Jindal Stainless has a large portfolio of over 120 SKUs which are exported to more than 40 countries.

JSL operates a robust distribution network of seven service centres and 14 offices which are located in India as well as abroad.

A key difference between JSPL and JSL is that JSL’s business is more directed towards value-added products such as cookware and consumer durables. However, JSPL’s business is aimed towards the infrastructure industry.

We got a good understanding of the businesses of both companies for our comparative study of Jindal Steel & Power vs Jindal Stainless. In the next section, we’ll brief ourselves on the steel industry landscape.

Jindal Steel & Power vs Jindal Stainless – Industry Overview

India’s steel industry is the second largest in the world ranking after China. In FY22, the nation manufactured 118 MT of steel accounting for close to 15% of the worldwide steel demand. 

Broadly, steel is a slow-growing industry with multiple end applications from construction, and residential, to automobiles and consumer durable goods. As a result, steel is a cyclical sector, closing following economic upcycle and contraction.

In the past few years, the global industry underwent a big shift as the Chinese government came down harsh on its steel producers to curb carbon emissions. As a result, the Chinese steel exports reduced taking the prices to new highs and India emerging as a major exporter. 

Thus, domestic steel producers posted record profits in the past few fiscals. However, the excitement fizzled as coking coal prices (which account for ⅓ cost of the manufacturing of steel) increased compressing margin for the companies. The second half of FY23 was comparatively better with an easing of energy costs for steel manufacturers.

In the years ahead, the macro-environment is beneficial for non-Chinese steel producers with an uptrend in capital expenditure, rising housing demand, and higher spending across various sub-sectors. All these developments have placed Indian steel companies in optimum position with many paying back their debts and announcing expansion plans.

Jindal Steel & Power vs Jindal Stainless – Financials

Revenue and Profit Growth

The total revenues of JSPL and JSL grew at a CAGR of 7.5% and 27.4% to Rs 52,768 crore and Rs 35,697 crore in FY23 respectively. The growth is not comparable as JSL underwent a merger with Jindal Stainless (Hisar) recently because of which its revenue growth is inflated.

Similarly, the bottom line of JSPL was negative in FY19 accounting for heavy loss and write-off in its subsidiary. Overall, both companies have demonstrated top-line and bottom-line growth in the last five years on the back of volume growth and margin expansion.

The figures below represent the total income and net profit of Jindal Steel & Power and Jindal Stainless for the last five years.

Particulars / Year20232022202120202019
JSPL - Total Income52,76851,13635,07336,94439,388
JSL - Total Income35,69721,27912,22912,95113,557
JSPL - Net Profit3,1938,2496,441-400-2,412
JSL - Net Profit2,0841,90941973145

(figures in Rs Cr)

Profit Margins

Jindal Steel being an integrated player boasts of higher profit margins than Jindal Stainless. This is reflected in the higher operating profit margin of JSPL 13.9% compared to 5.5% of JSL. Historically, the margins were lower for both companies from their peak in FY21 because of lower realisation and higher energy costs.

The table below showcases the operating profit margins and net profit margins of Jindal Steel & Power and Jindal Stainless for the past few years.

Particulars / Year20232022202120202019
JSPL - OPM13.926.429.610.97.5
JSL - OPM8.412.
JSPL - NPM7.513.210.9-10.1-6.1

(figures in %)

Return Ratios

We’ll now move on to study the profitability of both stocks for our comparative analysis of Jindal Steel & Power vs Jindal Stainless. JSPL reported lower return ratios in the recent fiscals on account of exception items and a larger equity base (against that of JSL).

The table below compares the return ratios (RoE and RoCE) of Jindal Steel & Power vs Jindal Stainless over the previous five financial years.

Particulars / Year20232022202120202019
JSPL - RoCE13.525.
JSL - RoCE18.534.915.912.413.5
JSPL - RoE8.216.111.4-0.3-5.1
JSL - RoE17.736.313.12.65.5

(figures in %)

Debt Analysis

The management of both companies did an impressive job of deleveraging their balance sheets by paying back the debt. As a result, the debt/equity ratio of the two steel stocks came down to 0.3 each in FY23 from their highs of upwards of 1. Likewise, their interest coverage ratio also improved.

The table below highlights the improvement in the debt/equity ratio and interest coverage ratio of Jindal Steel & Power vs Jindal Stainless.

Particulars / Year20232022202120202019
JSPL - Debt/Equity0.
JSL - Debt/Equity0.
JSPL - Interest Coverage6.
JSL - Interest Coverage11.

Jindal Steel & Power vs Jindal Stainless – Future Plans

So far we looked at the previous fiscals’ data for our comparative study of Jindal Steel & Power vs Jindal Stainless. In this section, we’ll try to get some sense of what lies ahead for the companies and their investors.

Future Plans of Jindal Steel & Power

  1. The company has earmarked a large capital expenditure of Rs 24,000 crore over the next few years till FY27.
  2. As a part of this, the company is directing 34% of the funds towards margin expansion which will help to drive better RoCE in coming years.
  3. JSPL recently acquired an under-construction 1,050 MW thermal power plant for its captive power needs.

Future Plans of Jindal Stainless

  1. JSL recently purchased Rathi Super Steel and acquired a 49% stake in an Indonesian nickel pig iron smelting plant as part of its inorganic growth strategy.
  2. The management believes that the company is in a sweet spot to take advantage of operating leverage as incremental capital expenditure required to bring revenue growth in future is low.

Jindal Steel & Power vs Jindal Stainless – Key Metrics

We are almost at the end of our comparative study of Jindal Steel & Power vs Jindal Stainless.  Let us take a quick look at the key metrics of the two stocks other than those covered above.

CMP ₹654.45₹378
Market Cap (Cr.)₹67,805 ₹30,656
Stock P/E21.3614.5
Book Value₹379₹145
Price to Book Value1.622.52
Promoter Holding61.2%57.9%


As we conclude our comparative study of Jindal Steel & Power vs Jindal Stainless, we can say that at first instance JSL may appear to be a better business with higher return ratios. However, with JSPL’s heavy CAPEX plans in place and its focus on growing RoCE, it is not much behind its smaller peer.

Thus, investors should closely track the quarterly earnings of both companies. Do you think JSPL will be able to deliver on its CAPEX plans? Or is JSL a better bet with higher return ratios? How about we continue this conversation in the comments below?

Written By – Vikalp Mishra

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