Jindal Steel & Power Ltd. is likely to become the fourth largest steel producer in India given its strong focus on expanding domestic operations, according to Motilal Oswal. The brokerage maintains a 'buy' on the stock with a target price of Rs 1,200 apiece, implying an upside of 15% from the previous close.
JSPL's ongoing capacity expansion at Angul, Odisha, will boost the company's crude steel capacity by 65% to 15.9 million tonne per annum and its finished steel capacity by 83% to 13.75 million tonne per annum, the brokerage said. Motilal Oswal anticipates that this expansion will be completed by June 2026.
Capacity Expansion In Progress
Jindal Steel currently has a total crude steel and finished steel capacity of 9.6 million tonne and 7.25 million tonne, respectively. This is set to rise to 15.9 million tonne and 13.25 million tonne, respectively.
The company has guided a total capex of Rs 31,000 crore towards capacity expansion and new projects. As of fiscal ended March, the company has spent around Rs 15,000 crore of the announced capex. The company plans to incur the remaining capital expenditure over the next three years.
While the capacity expansion at the Angul facility has faced delays, the expansions are expected to come on stream in phases by the June 30, 2026, compared to the earlier estimate of 2025-end. However, it is to be noted that the majority of the capacity will be commissioned during the financial year ending March 2026.
Margins
Global steel prices have been trending downwards for the past year on the back of muted global demand and Chinese oversupply. This factor is set to impact the company's margins in the near term, as per Motilal Oswal.
However, the brokerage also believes that prices have bottomed out, and the recent measures announced by China, which aim to boost the country's economy and real estate sector, will positively impact domestic steel prices going forward.
Furthermore, Jindal Steel & Power has also taken cost-effective measures to expand its operating margins.
Measures include:
Strengthening of raw material integration
Increasing share of captive power plant share
Higher share of flat steel at 55% in company's product mix
Focus on increasing share of value-added products from 67% currently.
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