JSW Steel has been assigned a BUY rating by Motilal Oswal Financial Services with a target price of Rs 1,520, implying an upside potential of nearly 19% from the current market price of Rs 1,274. The brokerage believes the steelmaker is entering a new growth phase driven by aggressive capacity expansion, deeper backward integration, logistics optimization, renewable energy adoption and a steadily rising mix of value-added products. With a strong balance sheet following the BPSL transaction and a clear roadmap to scale capacity toward 50 MTPA by FY31, JSW Steel appears well-positioned to capitalize on India's infrastructure and manufacturing growth cycle. Earnings visibility, cost efficiencies and premium product expansion are expected to support sustained profitability over the medium term.

Motilal Oswal Reiterates BUY Call on JSW Steel

Target Price: Rs 1,520

Current Market Price: Rs 1,274

Potential Upside: 19%

Motilal Oswal has reaffirmed its bullish stance on JSW Steel, highlighting the company's multi-pronged growth strategy centered on capacity creation, raw material security and higher-margin product expansion. The brokerage expects the company to emerge as one of the strongest beneficiaries of rising domestic steel demand and favorable industry dynamics over the next several years.

Massive Capacity Expansion to Fuel Long-Term Growth

JSW Steel is pursuing one of the most ambitious expansion plans in the Indian metals sector. The company currently operates approximately 32 million tonnes per annum (MTPA) of steelmaking capacity and aims to scale this to nearly 50 MTPA by FY31.

A key component of this strategy is the expansion of the Dolvi plant from 10 MTPA to 15 MTPA, backed by an investment of nearly Rs 210 billion and targeted for completion by September 2027. The company is also establishing a 1 MTPA Electric Arc Furnace facility at Kadapa, expected to become operational by FY29.

In Odisha, JSW Steel is developing a major greenfield project that includes a 5 MTPA blast furnace, steel melting facilities and hot strip mill infrastructure. This project is expected to become a cornerstone of the company's future production growth.

Rs 1.3 Trillion Investment Program Signals Confidence

The management has outlined capital expenditure plans of nearly Rs 1.3 trillion over the next four to five years. These investments will span steelmaking expansion, mining operations, downstream value-added projects and renewable energy initiatives.

Funding for these projects is expected to come from internal accruals, disciplined leverage management and approximately Rs 320 billion generated from the BPSL transaction. This funding structure significantly reduces execution risk and strengthens confidence in the company's growth roadmap.

Backward Integration Expected to Deliver Structural Cost Advantages

Iron Ore Security

JSW Steel continues to strengthen its captive iron ore sourcing capabilities. The company aims to increase captive iron ore utilization from roughly 40% currently to approximately 50% over the long term. Additional production from Karnataka and Goa mining assets is expected to support this objective.

Coking Coal Integration

The company is simultaneously improving coking coal security through domestic and international assets. Its investments in Illawarra Metallurgical Coal and the Mozambique coal project are expected to provide substantial long-term supply visibility.

Management estimates that captive coking coal availability could reach nearly 10 million tonnes annually by FY31, covering around half of total requirements and reducing exposure to global commodity price volatility.

Logistics Infrastructure to Unlock Further Efficiency

A major pillar of JSW Steel's strategy involves lowering logistics costs through integrated infrastructure.

The company is constructing a 302-kilometer slurry pipeline connecting iron ore resources with its upcoming Odisha steel facility. This pipeline is expected to improve transportation efficiency and lower costs.

Additionally, JSW Steel is developing the 30 MTPA Jatadhar Port while simultaneously expanding rail logistics capabilities and dedicated freight infrastructure. These initiatives should create meaningful cost advantages over competitors in the coming years.

Renewable Energy Push Strengthens Sustainability Profile

JSW Steel is accelerating renewable energy deployment as part of its decarbonization strategy.

The company already operates approximately 1 GW of renewable energy capacity and has received board approval to expand this to 2.5 GW, supplemented by 320 MWh of battery storage systems.

Beyond environmental benefits, this initiative is expected to improve long-term energy cost predictability and support profitability.

Premium Product Mix Becoming a Major Profit Driver

A significant transformation is underway within JSW Steel's product portfolio.

Value-added and special products (VASP) accounted for approximately 62% of total volumes during the fourth quarter of FY26. The company continues to invest heavily in downstream facilities that cater to high-growth industries such as automotive manufacturing and electrical steel applications.

Projects under development include advanced galvanizing lines, CRNO electrical steel facilities and specialized coated steel capacities. As these assets become operational, management expects a larger share of premium products, resulting in stronger margins and earnings quality.

Financial Outlook Remains Robust

Motilal Oswal expects revenue and earnings growth to accelerate over the next two fiscal years as newly commissioned capacities ramp up and domestic steel prices improve.

The brokerage forecasts EBITDA to rise from Rs 321 billion in FY26 to Rs 454 billion by FY28.

The brokerage also expects EBITDA per tonne to recover toward approximately Rs 14,500 by FY28, supported by better realizations, improved steel pricing and structural cost efficiencies.

Valuation Appears Attractive Despite Recent Rally

At the current market price, JSW Steel trades at approximately 7.5x FY28 estimated EV/EBITDA. Motilal Oswal believes the valuation remains reasonable considering the company's scale expansion, improving profitability profile and strengthening balance sheet.

The brokerage's target valuation is based on an FY28 EV/EBITDA multiple of 8.5x, resulting in a fair value estimate of Rs 1,520 per share.

Investment View

BUY

Current Price: Rs 1,274

Target Price: Rs 1,520

Upside Potential: 19%

JSW Steel appears to be entering a powerful investment cycle characterized by capacity growth, stronger raw material integration, enhanced logistics infrastructure and increasing exposure to high-margin value-added products. Combined with a healthier balance sheet and favorable domestic steel demand outlook, these factors position the company for sustained earnings expansion over the medium term. For investors seeking exposure to India's industrial and infrastructure growth story, JSW Steel remains one of the most compelling opportunities within the metals sector.