JSW Steel shares rise 6% as Q2 results beat estimates; brokerages see up to 39% upside

Revenue from operations rose 21% to Rs 54,486 crore, beating analysts’ expectations of Rs 50,494 crore, according to data compiled by LSEG. Coking coal prices, a key raw material for steelmakers, are expected to rise $25 a ton in the October-December period, chief executive Jayant Acharya said on a post-earnings call. The company, India’s largest steelmaker by capacity, expects to offset the cost pressures with healthy domestic steel demand, which is expected to grow at 7-8% in fiscal 2027, from strong construction and infrastructure activity, Acharya said.

All brokerages gave bullish commentary on the results of JSW Steel as the earnings beat their estimates and see up to 39% upside for the stock. Q2 Ebitda was slightly ahead of estimate, supported by higher volumes and better subsidiary profitability. Q3 profitability should improve, with higher steel prices, softer iron-ore costs and operating leverage expected to outweigh the coking-coal headwind, said the global brokerage.

"Longer term, greater visibility on path to 80 mt with approvals for capacity expansion at JSW Utkal and JJSL reinforces its growth outlook," said CLSA while giving 'Outperform' rating with target price of Rs 1,500. Q2 EBITDA rose 8% QoQ, inline with estimates. Expect margins to expand as 15% rise in India steel prices since Aug-26 more than offsets higher costs, said the global brokerage. "Announced 10 mt expansions further strengthen visibility on JSTL's target to double capacity by FY32.

At 8x 1Y forward EV/EBITDA, valuation is justified. Raise FY27-29E EPS by 2-4% & expect EPS to treble over FY26-29," said Jefferies while giving 'Buy' call and target price of Rs 1,650. "JSW Steel reported consolidated EBITDA of Rs 10,120 crore in Q2FY27, above JMFe of Rs 9,300 crore, driven primarily by stronger India volumes. Standalone sales volumes rose 20.4% QoQ to 6.31 mt, while EBITDA/t of Rs 11,600 per tonne was broadly in line with our ~INR 11.3k/t estimate.

Realisation was marginally lower QoQ and higher raw-material costs were partly offset by volume growth. "Key takeaways from the earnings call: i) Management expects Q3FY27 margins to improve sequentially, as the September steel price hikes are expected to more than offset a further $20–25/t increase in coking coal costs and a marginal increase in iron ore prices. ii) FY27 production and sales guidance was maintained at 29.75 mn tonnes and 28.6 mn tonnes, respectively, excluding JSW-JFE Steel Ltd. iii) The company approved Phase-II expansion of 5 mn tonnes at JSW Utkal, taking its planned capacity to 10 mn tonnes, alongside an 8 mn tonne pellet plant at JVML and a caster and plate-processing line at Dolvi. iv) JSSL plans to expand capacity by 5 mn tonnes to 9.5 mn tonnes by FY31 through the BPSL-JFE JV, with modest project-phase leverage expected to be supported by JV cash flows; JSW Steel’s ring-fenced structure is intact.

"We remain positive on JSW Steel, supported by strong domestic demand, volume growth and expansion-led growth; maintain BUY," said the domestic brokerage while giving target price of Rs 1,470. "JSTL delivered better-than-expected earnings in 2Q, supported by strong volume growth owing to Vijaynagr ramp-up. We remain constructive on the company's medium-term outlook, underpinned by the commissioning and ramp-up of new capacities, robust domestic steel demand, and rising share of VAP.

In addition, enhancing captive iron ore and improving coal security should strengthen cost competitiveness and support margin expansion," said the domestic brokerage. MOFS reiterated its 'Buy' rating on the stock with target price of Rs 1,460. JSW Steel delivered a strong operating performance in Q2FY27, driven by robust volumes following the ramp-up of BF#3 post debottlenecking and higher flat steel prices, said the domestic brokerage.

"Near-term earnings are expected to benefit from improving volumes led by BF#3 and higher steel prices, although elevated coking coal costs are likely to constrain EBITDA/t expansion," it said while giving 'Buy' rating and target price of Rs 1,337.