Despite a decline in price performance and subdued investor sentiment, ICICI Securities maintains a bullish outlook on Jindal Stainless Limited (JSL) with a reaffirmed ‘Buy’ rating and a revised target price of Rs 760, down from Rs 850. The brokerage expects JSL to post robust volume growth, maintain industry-leading return ratios, and benefit from operational leverage through strategic capacity additions. With its 1.2 million tonnes per annum (mtpa) greenfield stainless-steel plant in Indonesia progressing well and domestic capex on track, JSL remains a structural play in India’s metals space.

Volume Growth Accelerating with Global Integration

JSL is on course to record 11% CAGR in volumes through FY27, riding on rising demand from railways, infrastructure, and premium automotive applications. Its 90% utilization at the Jajpur plant, coupled with the upcoming 1.2mtpa Indonesian greenfield project, is expected to provide ample headroom for expansion.

The Indonesian plant, in which JSL holds a controlling stake, will not only boost the company's effective stainless-steel capacity to 4.2mtpa, but also allow seamless integration of ferroalloys and nickel pig iron, lowering production costs. With tariff parity now achieved in the U.S. market due to new regulations, JSL is poised to strengthen its presence across India, Europe, and North America.

EBITDA per Tonne Stabilizing at a Profitable Range

JSL’s consolidated EBITDA per tonne is expected to remain within Rs 19,000–20,500 through FY27, reflecting solid operational discipline despite delays in downstream capacity commissioning and slower profitability ramp-up at subsidiaries.

The revised EBITDA estimate for FY26 and FY27 is now Rs 54.3 billion and Rs 57.1 billion, respectively—13% to 20% below consensus—as ICICI Securities builds in conservative assumptions to factor in global uncertainties, slow export market recovery, and startup inefficiencies at newly acquired entities.

Capex Strategy: Lean Investments, High Leverage

JSL’s Indonesian project features low capital intensity due to its molten feed architecture—utilizing Argon Oxygen Decarburisation (AOD) without the need for expensive electric arc furnaces (EAFs). The Indian subsidiary JUSL is expected to benefit fully by utilizing its rolling capacity of 3.2mtpa.

On the cold rolling (CR) front, JSL’s acquisition of Chromeni Steel will take total CR capacity to 2.52mtpa, enabling the company to tap into higher-margin segments such as architectural and precision stainless steel. This expansion is anticipated to drive margin expansion over FY25 levels.

Revised Financials Reflect Realigned Profitability Expectations

ICICI Securities has revised its earnings forecasts downward for FY26 and FY27:

FY26E EPS lowered by 12.2% to Rs 38.8

FY27E EPS reduced by 10.5% to Rs 42.2

Net profits now estimated at Rs 31,962 million (FY26E) and Rs 34,801 million (FY27E)

Despite these reductions, JSL's projected return on equity (RoE) of 16–17% continues to outperform most domestic carbon steel peers, validating its premium valuation.

Valuation: Gap Narrowing with European Peers

JSL trades at a forward P/E of 10.9x, approximately 24% lower than its five-year peak. Interestingly, global stainless peers such as Outokumpu and Aperam are currently trading at 20–40% higher P/E multiples, despite weaker return profiles.

This signals that while JSL's stock price has corrected meaningfully, its fundamental value remains intact, and the risk-reward ratio is highly favorable for long-term investors.

Comparison with Domestic Carbon Steel Giants

Unlike carbon steel manufacturers, JSL enjoys an edge in import dynamics—there is no safeguard duty on stainless steel, and import quotas remain unchanged for Indian players.

While companies like Tata Steel and JSW Steel have delivered stronger short-term returns, JSL maintains a superior RoE of 21% (FY25E) and better earnings predictability. Over a 12-month horizon, JSL has declined 12.8%, underperforming peers, making its current valuation an attractive re-entry point.

ESG Profile and Institutional Ownership

JSL's ESG score of 63.7 (2024), although lower than its 2023 level, still reflects adequate disclosure standards in governance and environmental practices.

Institutional investors continue to hold a robust 28.4% stake, with foreign institutional investors (FIIs) owning 22.2%. Promoter holding stands firm at 60.7%, reinforcing management’s confidence in long-term value creation.

Key Risks: Trade Dynamics and Ramp-Up Uncertainty

Absence of anti-dumping duties on Indonesian imports poses a structural threat, especially as JSL’s Indonesian project reaches maturity.

Export dependency may be challenged if macroeconomic headwinds or protectionist policies tighten in key geographies.

Slower-than-expected commissioning of downstream assets and integration of subsidiaries could compress margins.

Despite these risks, JSL’s conservative approach to capex and product diversification positions it to weather industry cyclicality better than most.

Stock Levels and Target Price for Investors

Current Market Price (CMP): Rs 591

12-Month Target Price: Rs 760

Upside Potential: 29%

Support Levels: Rs 565–580

Resistance Levels: Rs 635 (short term), Rs 700 (medium term)

Investors are advised to accumulate the stock at current levels and on dips, as the next upcycle in industrial and infrastructure stainless demand could catalyze a rerating.

Conclusion: A High-Conviction Play on Stainless Superiority

Jindal Stainless stands tall among Indian metal stocks, not merely due to its market leadership, but due to its strategic foresight in global expansion, margin discipline, and innovation in capex deployment. Even with tempered expectations, its superior RoE profile and capacity-linked earnings visibility make it a compelling investment case.

In a market hunting for long-term structural compounders, JSL offers a blend of stability, optionality, and value. As India gears up for its next infrastructure boom and stainless steel adoption deepens, JSL is poised to emerge stronger—both operationally and financially.