The JSW Steel share price is upbeat after the company announced the restructuring of Bhushan Power and Steel (BPSL) through a joint venture (JV) with Japan’s JFE Steel Corporation. Leading domestic brokerage house Motilal Oswal retained its ‘Buy’ rating on the stock and has a target price of Rs 1,350 on the stock, implying an upside of 18% from the current market price.
Motilal Oswal said that the restructuring and the JV, taken together, will allow JSW Steel to monetise a significant portion of the value created through the turnaround of BPSL. This will allow JSW Steel to reduce debt and focus on the long-term growth plan of expanding capacity to 50 mtpa.
The brokerage maintained its positive outlook on the company, estimating double-digit revenue growth in FY26 and FY27, driven by the ramp-up of new capacity and price recovery.
What is the restructuring plan?
JSW Steel announced a strategic restructuring of the BPSL unit on December 03, 2025. As part of the transaction, BPSL (the step-down subsidiary of JSW Steel) will be transferred to JSW Sambalpur for a cash consideration of Rs 24,480 crore.
JFE Steel Japan will invest a total of Rs 15,750 crore in two tranches for a 50% stake in the 50:50 JV. The transaction has been executed at an enterprise value of Rs 53,000 crore, out of which Rs 31,500 crore of equity and Rs 21,000 crore of debt.
The JV is expected to raise debt of Rs 21,000 crore, which will be used to pay off JSW Steel as part of the transaction. JFE Steel Corporation already holds a 15% equity stake in JSW Steel.
“At Rs 53,000 crore of EV and FY28 EBITDA of Rs 4,500 crore for BPSL, this transaction appears to be executed at decent valuations from JSW Steel’s perspective,” said Motilal Oswal.
Motilal Oswal on JSW Steel: Restructuring to help deleverage
As part of the deal, JSW Steel will receive Rs 32,000crore in cash consideration. Its consolidated debt will be reduced by Rs 35,000 crore (including Rs 5,000 crore of debt currently held by BSPL, which will also be removed from JSW Steel’s books). Out of Rs 32,000 crore, Rs 24,400 crore will be received by March, with the balance expected by September 2026, subject to approvals.
Motilal Oswal believes that the recent development will support JSW Steel’s deleveraging plan. Its net debt-to-EBITDA ratio declined to 2.97x as of Q2 FY26, which is expected to decline more to 1.7x by FY27, supported by robust operating profit.
Motilal Oswal on JSW Steel: Softness in input costs to raise operating margin
The EBITDA margin is likely to rebound to 18-19% in FY26 and FY27 as input costs are expected to remain soft, which is Rs 12,000/t in FY26 and Rs 13,500/t in FY27. The softness in input costs will be on account of domestic steel price recovery, led by the safeguard duty.
