26-Oct-2026 08:42:39
CITI on JSW Steel ; Sell, TP Rs 1135
At Rs99.4bn (3% ahead), 2Q consol EBITDA rose 39% yoy - higher India volumes (+14%), realizations (+14%); offset in part by higher costs (+12%). India EBITDA/t: Rs13,250 vs. Rs15,110 in 1Q, Rs10,850 last year. Net D/EBITDA: 1.3x vs. 1.5x as of June26. Call highlights: 1) New projects: 5mt phase II Odisha, 5mt JSW JFE, value added facilities; expansion from 32mt to 54mt+ JSW JFE from 4.5mt to 9.5mt by FY31 2) Planned capex pending post 1HFY27:~Rs1,484bn. 3) 2Q utilization ~88%. 4) 2Q realizations fell <1% qoq, 3Q realizations should offset cost hikes, 5) Coking coal cost rose by $10 in 2Q, another $25/t hike in 3QFY27 Sell - likely downside to spot India EBITDA/t, flat prices at premium to import parity (Rs2,500/t), China demand environment is tepid (down ~3% YTD). Furthermore, are unsure about funding for JSW JFE expansion (estimate capex ~Rs300bn, qtrly EBITDA Rs11bn, net debt ~Rs215bn).
JSW STEEL LIMITED