Nuvama Institutional Equities maintained its ‘Buy’ rating on Jindal Steel & Power, with a target price of Rs 1,193. The brokerage instilled confidence in the company as it sees EBITDA to almost double by FY27 on the back of the commissioning of its blast furnaces.
Nuvama on Jindal Steel & Power: Blast furnaces to commission in Q2
Jindal Steel & Power will commission a 4.6 mtpa (million tonnes per annum) blast furnace by early Q2 FY26 and a 3 mtpa BoF (Basic Oxygen Furnace) by the end of Q2 FY26. This will bolster the company’s volume CAGR to 19% over FY25–27, against a CAGR of 1% over FY22–25.
The company is on the verge of starting hot metal production. “Accordingly, we expect ramp-up to begin in H2 FY26, driving sales volume growth of 12.5% YoY to 9 mt in FY26 and 25% YoY growth in FY27 to 11.2 mt,” said Nuvama. Also, one more 3 mtpa BoF is expected to be commissioned in FY27. Over FY22–25, Jindal Steel delivered a 1% volume CAGR and is now poised to clock a 19% CAGR over FY25–27.
Nuvama on Jindal Steel & Power: Steel prices lower amid seasonality
The onset of monsoon and higher purchases by customers earlier have led to a slowdown in steel demand, putting pressure on steel prices. “Our channel checks indicate that inventory has built up at the producers’ level, but there’s minimal inventory in the trade channel,” said Nuvama. This will not only cushion prices, but prop them up once demand improves post-monsoon.
“Additionally, amid the 12% safeguard duty (SGD) on flat products, we believe hot-rolled coil (HRC) prices should not fall much hereon,” said the brokerage house. Nuvama expects the company to record margins of Rs 14,000/tonne in the first half of FY26, given lower iron ore and coking coal prices, along with Jindal Steel’s increasing captive coal.
With the ramp-up of blast furnaces, higher volumes, lower raw material prices, improved product mix, and stable steel prices is likely to raise the EBITDA almost double by FY27.
Jindal Steel & Power’s stock performance
The share price of Jindal Steel has fallen 1.5% in the last five trading sessions. The stock has declined by 4.8% in the past one month and 3.6% in the last six months. The steel maker’s stock has dropped 15% in the past one year.