Apr'25 View on JSW Steel Ltd

JSW Steel is primarily engaged in the business of manufacture and sale of Iron and Steel Products.[1] It is the flagship business of the diversified, US$ 23 billion JSW ***** Group has interests in energy, infrastructure, cement, paints, sports, and venture capital. • JSTL’s Q3FY25 consolidated EBITDA came in marginally ahead of our estimates, mainly led by higher volumes. • We expect a 9% volume CAGR over FY24-27E, aided by the recently commissioned expansion projects. • We expect steel margins to recover in the coming quarters, led by the bottoming out of steel prices, lower coking coal costs and operating leverage. • Stock is currently trading at valuation of 11.6x P/E FY27E EPS. • We trim our earnings and revise Fair Value to Rs975 on rollover. Maintain REDUCE. Q3FY25 Earnings Update: Positives: • JSTL’s consolidated EBITDA stood at ~Rs5580 cr (-22% yoy, +2.6% qoq), higher than our estimate of ~Rs5380 cr, mainly on better volumes in Indian operations, partially offset by weaker margins. • Volume to ramp up on capacity additions and seasonal tailwinds. Negatives: • Volumes in Q3FY25 continued to be impacted by low export volumes (8% mix).