Motilal Oswal has issued a BUY call on JSW Steel, setting an optimistic target price of Rs 1,180—representing an upside of approximately 15% from the current market price. The report outlines an aggressive phase of expansion, robust cost optimization, and a clear premiumization trajectory that underpin JSW Steel’s long-term growth prospects. Investors are urged to take note of strategic project updates, raw material integration, expanding value-added product lines, and an improving margin profile amid supportive macro conditions.

JSW Steel—BUY, Target Rs 1,180, Expansion and Premiumization in Focus

JSW Steel stands at the threshold of its next transformative phase, with Motilal Oswal rating the stock a BUY and targeting Rs 1,180. The company is deploying over Rs 600 billion in capex through FY27 to escalate steelmaking capacity, fortify raw material security, and enhance operating efficiencies. While FY25 saw margin compression from discounted imports, projected double-digit revenue growth and margin recovery in FY26–27 reinforce confidence in resilient performance. Investors are advised to pay close attention to volume growth drivers, cost leadership initiatives, and balance sheet discipline as JSW aims to sustain its industry dominance.

JSW Steel—Initiating with a BUY: Stock Levels and Valuations

Motilal Oswal reaffirms a BUY stance on JSW Steel, establishing a target price of Rs 1,180 against the prevailing Rs 1,030, marking significant headroom for appreciation. At a current valuation of 7.6 times FY27E EV/EBITDA, the stock is perceived as attractively valued relative to its forward earnings potential and strategic expansions.

Key valuation metrics as per projections:

Strategic Capacity Expansion: JSW Bets Big on Steel Demand

JSW Steel is spending Rs 600 billion over three years to scale up domestic steelmaking capacity from 34.2 million tonnes per annum (mtpa) to 41.9 mtpa by September 2027—Phase I, with a further headroom for 50 mtpa by FY31 under Phase II.

Vijayanagar plant’s 5 mtpa expansion is completed, boosting total Indian capacity to 34 mtpa.

Ongoing projects at Dolvi (adding 5 mtpa) and further upgrades at BPSL and Salem will cement JSW’s position as the nation’s largest steelmaker.

A series of debottlenecking and downstream initiatives are planned to ensure steady volume growth and timely commissioning of new capacities.

Raw Material Security and Cost Leadership: Resource Integration Drives Margins

Enhanced captive iron ore and coking coal linkages are central to JSW’s goal of mitigating global price shocks while reducing its cost curve.

About 37% of JSW’s iron ore in FY25 was sourced internally. The target is 50% by FY26, backed by operationalizing additional mines in Karnataka, Odisha, and Goa.

The company is bolstering coking coal security through domestic mines and international assets, including a 20% stake in Illawarra, Australia, and active negotiations in Mozambique.

Infrastructure investments in slurry pipelines, captive ports, and rail sidings aim to curtail logistics expenses.

Premiumization and Product Diversification: A Step Toward Higher Margins

JSW Steel has elevated its value-added special products (VASP) portfolio, which now represents 62% of sales (excluding JVML), while launching more than 100 new steel grades in FY25.

Downstream investments in automobile-grade lines at Vijayanagar and new JV initiatives (e.g., with JFE for CRGO steel) are set to underpin long-term margin improvement.

The company’s strategy is to keep over 50% share of VASP in the product mix, diversifying into new markets like defense and railways while fortifying its presence in auto, infrastructure, and renewables.

Financial Performance: Margin Recovery Set to Accelerate

JSW’s EBITDA per tonne dipped to Rs 8,659 in FY25 amid import-driven price pressures, but a sharp rebound to Rs 12,000–13,500 is forecast for FY26–27 as input costs remain soft and safeguard duties shore up domestic prices.

Robust cash flow generation (projected at Rs 620 billion through FY27) will fund expansion and deleverage the balance sheet—net debt/EBITDA is expected to fall from 3.34x in FY25 to 1.7x by FY27.

Revenue growth will resume a double-digit pace as new capacities ramp up and demand, underpinned by government infrastructure spending, remains buoyant.

Project Pipeline and Execution Outlook: Staying Ahead of the Curve

JSW Steel’s ongoing and planned projects reflect disciplined capital allocation and a relentless focus on operational excellence.

Majors such as Vijayanagar’s expansion, Dolvi’s hybrid mill, and BPSL’s wire rod mills are advancing rapidly, while the pipeline of mine development and renewable integration progresses as scheduled.

96% of planned capex for FY26–28 will serve Indian operations, securing JSW’s future as an integrated, cost-competitive steel behemoth.

Key Takeaways and Stock Actionables

Motilal Oswal’s thesis rests on three pillars: volume growth from capacity addition, cost leadership via resource control, and premiumization through VASP expansion. These should drive robust earnings, margin enhancement, and valuation rerating. Investors positioning for India’s steel upcycle are presented with a compelling entry opportunity at current levels, with the following stock action points:

• Buy JSW Steel with a price target of Rs 1,180.
• Watch for near-term catalysts from project execution updates and policy support on steel import curbs.
• Monitor quarterly demand trends and input cost developments as potential risk factors.

Bottomline for Investors: Investment Thesis Supported, Upside Remains Intact

Motilal Oswal’s research articulates a bullish outlook on JSW Steel for 2025–2027, fueled by capacity-led growth, operational agility, and sustained premiumization. Despite cyclical challenges, the company’s strategic investments and financial prudence strongly position it for shareholder value creation. With attractive valuation multiples and clear earnings growth visibility, JSW Steel stands as a solid BUY for investors keen on participating in India’s steel growth story.