 "Axis Securities says 'Buy' Jindal Steel; 3 reasons behind bullish call")
Domestic brokerage firm Axis Securities is bullish on the steel-making company, Jindal Steel, and has recommended a Buy rating on the stock, citing the company’s position at the cusp of capacity expansion, its expanding product portfolio, and attractive valuation.
According to Axis Securities’ estimates, the stock is currently valued at 7x FY28 earnings before interest, taxes, depreciation, and amortisation (Ebitda), which the brokerage considers attractive. Axis Securities has set a target price of ₹1,123 per share, implying an upside of 10 per cent from the previous close of ₹1,021 per share.
Meanwhile, here are the 3 reasons behind Axis Securities’ bullish call:
Capacity expansion to drive growth
Jindal Steel is on the cusp of expansion at its Angul facility. On September 26, 2025, the company raised its iron-making capacity to 15.02 MT from 10.42 MT by commissioning one of India’s largest blast furnaces (4.6 MT, BF-II), nearly doubling hot metal capacity at Angul from 6 MTPA to 10.65 MTPA.
In line with iron-making expansion, Jindal Steel commissioned a 3 MTPA Basic Oxygen Furnace (BOF-II) under Phase I, increasing crude steel-making capacity from 6 MTPA to 9 MTPA at Angul and taking total steel-making capacity to 12.6 MTPA from 9.6 MTPA. Phase II at Angul, comprising 2 MTPA DRI-II and 3 MTPA BOF-III, is planned for completion by March 2027, taking total steel and iron-making capacity to 15.6 MTPA and 17.02 MTPA, respectively. ALSO READ | Motilal Oswal sees KFin Tech as dominant, cash-generative; check outlook
Margin expansion projects to enhance cost competitiveness
Axis Securities noted that Jindal Steel is focusing on backward integration, value-added products (VAP), and increasing captive power share. The company partly meets its iron ore requirements through captive mines at Kasia (3.11 MT) and Tensa (7.5 MT) and recently acquired the Roida-I iron ore and manganese block (3 MTPA). The iron ore slurry pipeline from Barbil to Angul is 90 per cent complete and expected to be commissioned in H2FY26.
The brokerage further highlighted Jindal Steel’s coal mine development to meet captive requirements. Among four mines, two are operational (Utkal C and Gare Palma IV/6), while the other two (Utkal B1 & B2) are in advanced development stages. Utkal B1 is expected to commence production in H2FY26.
Under its 1.2 MTPA CRM complex, the company commissioned 0.2 MT of continuous galvanizing line (CGL-1) in Q1FY26 and is progressing toward multiple lines in FY26. The first module of the Sub-critical Boiler Plant (525 MW) is ready, with grid synchronisation expected in Q3FY26; commissioning of the second module is in progress. ALSO READ | Brokerages raise target on Shriram Finance post analyst call; details here
Improved balance sheet
Jindal Steel has a total capex plan of ₹47,040 crore by FY28E, including the Angul expansion and ₹16,000 crore of cost-efficiency projects over FY26-28. Of this, ₹30,850 crore has been incurred by September 2025, with the balance funded from internal accruals. Axis Securities expects Jindal Steel to keep net debt/Ebitda below 1.5x throughout the cycle. The company has reduced debt, with net debt/Ebitda declining from 4.56x in FY20 to 1.48x as of Q2FY26.
The brokerage, however, cautioned that a decline in steel prices, rising coking coal and iron ore costs, and delays in commissioning or utilisation of new capacities may pose key risks to the company.
(Disclaimer: The views and investment tips expressed by the brokerage in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.)