Motilal Oswal has issued a BUY recommendation for JSW Steel Limited (JSTL), setting a target price of Rs1,350 per share from the current market price of Rs1,144. This directive stems from a transformative joint venture with JFE Steel of Japan, which crystallizes value from the Bhushan Power and Steel Ltd. (BPSL) turnaround, slashes debt burdens, and propels capacity expansion toward 50 million tonnes per annum by FY31. Investors stand to reap robust gains amid steel price resurgence and operational efficiencies, with projected EBITDA margins rebounding to 18-19% and net debt-to-EBITDA dipping below long-term averages. This strategic pivot not only deleverages the balance sheet but fortifies JSW Steel's dominance in India's burgeoning metals sector.

Strategic Restructuring Ignites Shareholder Value

JSW Steel's audacious maneuver involves transferring its BPSL unit—a 4.5 million tonnes per annum integrated facility in Odisha—into a 50:50 joint venture with JFE Steel via JSW Sambalpur Steel. Executed at an enterprise value of Rs530 billion (Rs315 billion equity, Rs210 billion debt), the deal infuses Rs157.5 billion from JFE in tranches, yielding JSW Steel Rs320 billion in cash proceeds—Rs244 billion by March 2026, balance by September. This transaction eradicates Rs350 billion in consolidated debt, including BPSL's Rs50 billion load, streamlining governance through PSL amalgamation and elevating promoter stake to 46.74%.

BPSL, acquired via Insolvency and Bankruptcy Code in 2021 for Rs193.5 billion, has morphed from distress to profitability: FY25 revenues hit Rs214.4 billion, EBITDA Rs22.1 billion, net profit Rs2.6 billion. The JV embeds JFE's technological prowess for high-value steel grades, unshackling JSW Steel to prioritize greenfield expansions without diluting core focus. Amalgamation eliminates intermediary promoter entities, ensuring pristine structure for global partnerships.

Capacity Odyssey: From 34.2 to 50 MTPA

JSW Steel's blueprint charts a meteoric ascent, with India operations swelling from 34.2 million tonnes per annum currently to 41.9 million by FY26E and 50 million by FY31E, pending Phase-II approvals. Vijayanagar anchors at 24 million, bolstered by Dolvi (5 million), Salem (0.2 million), and BPSL (0.5 million post-JV). Utilization rates, hovering at 78-90% historically, sustain headroom amid steady accretions, targeting 30 million tonnes sales volume by FY26E.

Capex surges to Rs147-210 billion annually through FY28E, with 96% earmarked for domestic ventures—sinter plants, captive power, mining efficiencies, and value-added products. Dolvi's expansions and sustenance outlays fortify resilience, while US capacity remains ancillary at 1.5 million tonnes. This trajectory dovetails with India's infrastructure boom, positioning JSW Steel as a volume behemoth.

Financial Fortification and Margin Rebound

Projections paint a renaissance: Revenues escalate from Rs1,839 billion in FY26E to Rs2,300 billion by FY28E, fueled by volume ramp-ups and steel price revival to Rs12,000-13,500 per tonne. EBITDA catapults to Rs474 billion (20.6% margin), PAT to Rs219 billion (EPS Rs89.9). ROE surges to 18.8%, ROCE to 13.1%, with net debt/EBITDA contracting to 1.7x by FY27E from 2.97x in 2QFY26.

Domestic HRC and rebar prices, softened by seasonal tepidity, presage uptick via safeguard duties. EBITDA per tonne rebounds from Rs7,488 to Rs13,780, underpinned by coking coal stability and operational leverage. Balance sheet bulwarks: Net worth to Rs1,274 billion, debt/equity to 0.5x.

Key Support and Resistance Levels for Traders

Technical contours delineate pivotal thresholds. Immediate support clusters at Rs1,100-1,120, buttressed by 50-day moving average; breach risks Rs1,050 pivot. Resistance looms at Rs1,200 (200-day MA), with upside breach targeting Rs1,300 en route to Motilal's Rs1,350 bullseye.

Valuation Vanguard and Investor Imperative

At 8.4x FY27E EV/EBITDA, JSW Steel trades below one standard deviation yet above long-term averages, with PB at 2.6x. Target derives from 9x Sep27E EV/EBITDA: Rs4,101 billion EV less Rs681 billion net debt yields Rs1,350/share on 2.44 billion shares. Shareholding stable: Promoters 45.3%, FIIs 25.7%, DIIs 11.4%.

For investors, BUY beckons risk-tolerant portfolios eyeing 18% upside. Accumulate on dips to Rs1,100; trail stops at Rs1,050. Long-term holders bank on deleveraging and 50 MTPA milestone for compounded returns exceeding 20% CAGR.