Analysts hike Jindal Steel target price; 4 key triggers behind the upgrade

Analysts have turned more bullish on Jindal Steel stock after the company achieved a long-awaited capacity expansion and is now positioned for strong earnings growth over the next three years. 

 

“Jindal Steel has commissioned the keenly awaited 4.6mtpa BF and 3mtpa BoF, which has been delayed by almost two years from the initial timeline. This provides volume growth visibility (a volume compound annual growth rate (CAGR) of 17 per cent over FY25-28E versus 1 per cent over FY22-25) over FY25-28E,” said Ashish Kejriwal and Kunal Kothari of Nuvama.

 

Analysts at Nuvama have revised their target price on the Jindal Steel stock to ₹1,426 from ₹1,193 earlier, valuing it at 7x FY28E EV/Ebitda, and reiterated a ‘Buy’ rating. 

 

“Despite weak Q2FY26 expectations amid lower steel prices, we maintain FY26E/27E Ebitda. We rollover estimates to FY28, valuing at 7.0x FY28E EV/Ebitda, yielding a TP of ₹1,426 (earlier ₹1,193); reiterate ‘Buy’,” Nuvama analysts said. 

Here are the top four reasons driving the Jindal Steel stock target upgrade:

Major capacity addition to drive volume growth

The company has commissioned its 4.6 million tonnes per annum (mtpa) blast furnace (BF) and 3 mtpa basic oxygen furnace (BoF), a project delayed by nearly two years. The milestone is expected to kickstart a sharp rise in volumes from the second half of FY26. 

 

Analysts project sales volumes to climb 12.5 per cent year-on-year (YoY) to 9 mt in FY26 and 25 per cent YoY to 11.2 mt in FY27. Another 3 mtpa BoF is scheduled to come onstream in H1FY27, lifting overall steelmaking capacity by 62 per cent to 15.6 mtpa from the current 9.6 mtpa. 

 

“After clocking just 1 per cent volume CAGR over FY22-25, JSPL is now poised to deliver 17 per cent CAGR over FY25–28E,” analysts said.  ALSO READ | Auto sales set for strong September; analysts bet on Maruti, M&M, TVS Motor

Ebitda set to more than double by FY27

With rising volumes, a richer product mix, and better integration, analysts believe, Jindal Steel is expected to deliver strong profitability. The company is progressing with several backward and forward integration projects, including coal block development, a slurry pipeline, a pellet plant, and new galvanising and colour coating lines, most of which will be operational by FY27.

 

Meanwhile, softer coking coal prices and a likely safeguard duty on hot rolled coil (HRC) imports are expected to support margins. Analysts see Ebitda per tonne rising to over ₹15,000 in FY26 and further to around ₹16,800 in FY27-28, compared with an average of ₹12,716 during FY23–25. “We expect Ebitda to more than double to ₹21,300 crore by FY28, implying a 31 per cent CAGR,” they noted.

Balance sheet deleveraging on track

Despite higher working capital needs in Q1FY26, which pushed net debt/Ebitda to 1.49x, analysts expect leverage to decline sharply. Ramp-up in volumes and inventory release should bring the ratio below 1x by FY26 and as low as 0.1x by FY28. Of the ongoing ₹47,000 crore capex programme, around 60 per cent has already been spent, and the remaining is expected to be phased out over the next three years without straining the balance sheet.

Standout earnings growth among peers

Jindal Steel is projected to deliver the highest earnings growth in the sector with improving return ratios. Analysts estimate return on capital employed (RoCE) to expand from about 11 per cent in FY25 to 21.4 per cent by FY28. 

 

“The company stands out with its top earnings growth trajectory and least leverage among peers,” the brokerage highlighted.

 

With capacity expansion, rising profitability, and rapid deleveraging, analysts believe, Jindal Steel is seen as a standout performer in India’s steel sector over the medium-term.