JSW Steel Share Price Could Reach Rs 1,150: Motilal Oswal Research
Motilal Oswal has reiterated its BUY rating on JSW Steel (JSTL), setting a target price of Rs 1,150, implying an 18% upside from the current market price of Rs 977. The research highlights strong expansion plans, stable cost efficiency strategies, and expected EBITDA growth of 15% CAGR until FY27 as key drivers of value creation.
The company remains committed to achieving a 50 MTPA steel production capacity by FY31, with multiple expansion projects in Vijayanagar and Dolvi already underway. However, near-term pricing pressures and global demand concerns remain headwinds.
Despite a weak global pricing environment, JSTL's volume growth, focus on value-added products, and operational efficiency improvements are expected to support long-term profitability.
JSW Steel's Q3FY25 Financial Performance
JSW Steel’s Q3FY25 results reflect resilient operational performance, supported by stable realizations and controlled costs.
Financial Snapshot
| Metric | Q3FY25 | Q3FY24 | YoY (%) | Q2FY25 | QoQ (%) |
|---|---|---|---|---|---|
| Revenue (Rs crore) | 1,694 | 1,660 | 2.0% | 1,750 | -3.2% |
| EBITDA (Rs crore) | 230 | 185 | 24.3% | 282 | -18.4% |
| Adjusted PAT (Rs crore) | 41 | 36 | 13.9% | 90 | -54.4% |
| EBITDA Margin (%) | 13.6 | 11.2 | +240 bps | 16.1 | -250 bps |
| Net Debt to EBITDA | 3.57x | 3.41x | +4.7% | 3.44x | +3.8% |
Key Insights
Revenue rose by 2.0% YoY, despite softening steel prices.
EBITDA surged 24.3% YoY, demonstrating cost-control measures and stable margins.
Adjusted PAT fell 54.4% QoQ, reflecting pricing pressures and lower other income.
Net debt to EBITDA ratio increased slightly due to capital expenditures for expansion projects.
JSW Steel's Expansion Strategy: Scaling Up to 50 MTPA by FY31
Capacity Expansion Plans
JSW Steel’s Vijayanagar expansion added 5 MTPA in Q3FY25, taking its total domestic capacity to 34 MTPA.
A further 7 MTPA expansion (2 MTPA at Vijayanagar and 5 MTPA at Dolvi) is set for completion by September 2027.
Additional debottlenecking projects (0.5 MTPA at BPSL and 0.3 MTPA at JISPL) will take overall capacity to 42 MTPA by FY27.
A longer-term goal of 50 MTPA by FY31 is under board approval.
Sustainability & Cost Efficiency Initiatives
Raw material security: Captive iron ore production to increase to 15 MTPA in Karnataka and 30 MTPA in Odisha by FY26.
Logistics & renewable energy (RE) investments: Slurry pipelines, rail infrastructure, and captive RE projects will lower costs and improve efficiency.
Key Investment Drivers
1. Strong Volume Growth & Demand Outlook
Sales volume hit 19 MTPA in 9MFY25 and is on track to reach 26.5 MTPA by FY25E.
FY26-FY27 volume growth of 8-10% YoY expected as new capacity comes online.
2. Rising Share of Value-Added Products (VAP)
VAP accounted for 60% of Q3FY25 sales, supporting higher margins and stable realizations.
Management targets 50-60% VAP share in total sales, enhancing profitability.
3. Overseas Operations Showing Signs of Improvement
Ohio plant utilization increased from 43% to 64% in Q3FY25, reducing losses.
Italian operations turned EBITDA-positive at EUR 1.9 million.
4. Raw Material Price Relief
Iron ore prices eased in Q4FY25, following Rs 300/ton reduction by NMDC.
Coking coal prices remained stable at $200-210/ton, reducing input cost pressures.
Stock Valuation & Price Target
Key Valuation Metrics
| Metric | FY25E | FY26E | FY27E |
|---|---|---|---|
| Revenue (Rs crore) | 1,694 | 2,142 | 2,389 |
| EBITDA Margin (%) | 13.6 | 17.7 | 19.0 |
| EPS (Rs) | 17.0 | 61.7 | 82.8 |
| P/E (x) | 61.5 | 15.8 | 11.8 |
| EV/EBITDA (x) | 13.8 | 8.2 | 6.7 |
Valuation Takeaways
JSW Steel trades at an EV/EBITDA of 6.7x FY27E, making it attractively priced.
Motilal Oswal’s price target of Rs 1,150 is based on 7.5x EV/EBITDA on FY27E earnings.
Upside potential of 18% from the current price of Rs 977.
Key Risks to Consider
1. Weak Global Steel Prices
HRC/CRC steel prices declined 4-5% QoQ in Q3FY25, impacting near-term profitability.
Global demand slowdown and US tariffs could further pressure pricing.
2. Higher Leverage Due to Expansion Costs
Net debt to EBITDA ratio increased to 3.57x in Q3FY25, reflecting ongoing capex investments.
Deleveraging remains a key focus area to sustain long-term growth.
Conclusion: A Long-Term Growth Story with Short-Term Pricing Pressures
✅ JSW Steel remains a leading player in India’s steel sector, supported by aggressive expansion plans.
✅ Near-term pricing headwinds exist, but strong demand outlook and cost efficiency measures mitigate risks.
✅ EBITDA growth of 15% CAGR until FY27 and improving margins support a positive outlook.
Final Verdict: Motilal Oswal reiterates a ‘BUY’ rating on JSW Steel, with a target price of Rs 1,150, offering an 18% upside.
