Target: ₹1,070

CMP: ₹ 896.75

Jindal Steel and Power’s strategic expansion would augment its crude steel capacity by 65 per cent to 15.9m tonnes and enrich its product mix. As India enters a nation-building phase, demand for steel is likely to be robust. Therefore, with the company’s huge capacity expansion, we factor in a about 24 per cent sales volume CAGR over FY24-26. Also, the company is strengthening raw-material integration and increasing the share of VAPs.

Considering its strong focus on margin expansion, we expect it to achieve ₹15,175 EBITDA/tonne by FY26. With a 0.9x net debt/EBITDA, it has one of the strongest balance sheets among domestic peers. The company has many iron ore and coal mines in India and internationally. This aids in timely raw-material availability and paves the way for it to be the lowest-cost domestic steel producer.

Robust demand for steel in India is expected to persist. Considering the company’s strong focus on capacity addition, raw-material integration, cost-control initiatives, increase in share of VAPs and strong control of its balance sheet, we initiate coverage on it, with a Buy rating and a TP of ₹1,070, 6.5x FY26e EV/EBITDA.

Risks: Delay in capex execution and domestic slowdown.