JSW Steel Stock Price was trading firm on Friday as the markets were showcasing bullish trends. JSW Steel opened the trading session at Rs 970 and touched intraday high of Rs 984.55 (also 52-week high for the stock) at the time of publication of this report. The day's low remained at Rs 965.2 for JSW Steel.

Indian markets were trading firm and major indices were at their all-time highs. US markets registered impressive gains on Thursday, a day after the US Federal Reserve reduced the interest rates by 50 basis points. While investing community was expecting immediate gains in US markets, the bullish trends came one day after the Federal Reserve decision on interest rates.

Global brokerage firm Macquarie has issued a bullish outlook for India's metal sector, citing strong domestic fundamentals and declining input costs as key growth drivers. The firm has upgraded JSW Steel to an "outperform" rating and raised target prices for major metal companies like Coal India, Jindal Steel & Power, Hindalco, and Tata Steel. The positive forecast is supported by robust domestic steel demand, ongoing capacity expansions, and potential commodity price increases in the next 6-12 months. Analysts from Motilal Oswal also echo the optimism, projecting double-digit revenue growth for FY26 driven by price recovery and increased production capacity.

Macquarie's Optimistic Outlook on India's Metal Sector

Strong Domestic Fundamentals and Easing Input Costs:
Macquarie's latest analysis on India's metal sector highlights robust domestic fundamentals combined with easing input costs as critical factors driving the sector's growth. The brokerage's bullish stance reflects the sector's resilience amidst global market fluctuations, positioning it favorably for future gains.

Upgraded Ratings and Raised Target Prices:
Macquarie has upgraded JSW Steel to an "outperform" rating, reflecting confidence in the company's ability to capitalize on market conditions. Alongside JSW Steel, the brokerage has raised target prices for other key players, including Coal India, Jindal Steel & Power, Hindalco, and Tata Steel, signaling a broad-based positive outlook across the sector.

JSW Steel's Strong Prospects

Upgrade to “Outperform” with Significant Upside Potential:
JSW Steel's rating upgrade to "outperform" is accompanied by a revised target price of ₹1,077, up from ₹884. This revision represents a potential upside of over 13% from its previous close, highlighting the company’s favorable positioning in the market.

Benefitting from Domestic Price Premiums and Reduced Input Costs:
Macquarie emphasizes that steel companies, including JSW Steel, stand to gain from domestic price premiums and steady leverage, while lower input costs further enhance their profitability. The brokerage also notes potential upside risks in commodity prices over the next 6 to 12 months, which could provide additional gains.

Motilal Oswal's Positive Outlook on JSW Steel

Analyst Support for Continued Growth:
Motilal Oswal has echoed Macquarie's optimism, issuing a BUY call for JSW Steel in its September 2024 report, with a target price of ₹1,100. This bullish stance aligns with the broader market sentiment and underscores the company's growth potential.

Robust Domestic Demand and Capacity Expansion:
India's domestic steel demand is expected to remain strong, fueled by substantial capital expenditures in infrastructure development. JSW Steel's ongoing capacity expansion is on track, positioning the company to capture emerging opportunities effectively. The brokerage forecasts volume growth of +9% YoY in FY25 and +8% YoY in FY26, driven by increased production capacity.

Revenue and EBITDA Growth Projections

Double-Digit Revenue Growth Expected by FY26:
Macquarie projects double-digit revenue growth for JSW Steel in FY26, supported by price recovery and capacity ramp-up. This growth is expected to drive the company's EBITDA close to ~INR14,500 per tonne, reflecting significant operational efficiency and market positioning.

Strong Integrated Operations and Iron Ore Linkages:
JSW Steel, a leading integrated steel producer, continues to benefit from its robust iron ore linkages. The company currently meets approximately 35% of its iron ore requirements through captive mines and plans to increase this share in the future. In 1QFY25, value-added products (VAP) constituted 64% of total volumes, highlighting JSW Steel’s focus on high-margin products.

Macquarie and Motilal Oswal's favorable outlook on JSW Steel and the broader metal sector reflect strong market fundamentals, strategic expansions, and anticipated price recoveries, suggesting a promising trajectory for the industry's key players.