Brokerages up target on JSW Steel despite valuation worries after strong Q1

Brokerages on JSW Steel: Brokerages have largely raised their target prices for JSW Steel after its robust June quarter of financial year 2026 (Q1FY26) results, even as many continue to flag stretched valuations and potential challenges in the near term.

 

JSW Steel posted a 158 per cent year-on-year (Y-o-Y) jump in consolidated net profit at ₹2,184 crore for the June quarter, beating Bloomberg estimates of ₹2,095 crore. The earnings beat was driven by higher volumes, lower coking coal costs, and strong operational performance. Revenue rose marginally by 0.5 per cent Y-o-Y to ₹43,147 crore.

 

Nuvama Institutional Equities retained its ‘Reduce’ rating on JSW Steel but acknowledged the strong execution, especially on margins. Consolidated Ebitda rose 19 per cent sequentially to ₹7,580 crore, with Indian operations clocking an Ebitda per tonne of ₹11,658 – a sharp ₹2,805 Q-o-Q increase. Its overseas arm also returned to profitability. However, Nuvama sees Ebitda/t falling by ₹1,500–2,000 in Q2FY26 due to weaker prices and seasonal softness, and maintained its target price at ₹977.

 

“We reckon Q2FY26E Ebitda per tonne would fall ₹1,500-2,000 Q-o-Q due to lower steel prices amid seasonally weak demand, partially offset by absence of one-off cost in Q1 and lower raw material (RM) cost. JSW has filed a review petition on the recent Supreme Court judgment rejecting the Bhushan Power acquisition and is awaiting the date of hearing. At 8x FY27E EV/Ebitda, our TP is unchanged at ₹977; retain Reduce,” said Nuvama analysts, in a note.  ALSO READ | Q1 early-bird results: Revenue, profit performance worst in 16 quarters 

Citi also reportedly maintained a bearish stance with a ‘Sell’ rating but raised its target to ₹880 from ₹760. While Q1 benefited from firm prices, Citi believes lower input costs in Q2 may only partially offset the anticipated decline in prices. It warned that the stock’s current valuation reflects “excessive optimism,” and expects only a gradual recovery in Chinese margins despite supply curbs in H2CY25.

 

CLSA echoed a cautious tone, retaining its ‘Reduce’ call while nudging its target price up to ₹890 from ₹880. The brokerage flagged forex losses that dented Q1 numbers but acknowledged management’s positive outlook for Q2. It continues to see stretched valuations and said execution of key projects will be closely monitored.

 

Antique Stock Broking took a more balanced view, retaining a ‘Hold’ rating while revising its target to ₹942 from ₹905. It highlighted domestic steel demand resilience, aided by continued government capex and easing interest rates. Antique sees further upside from JSW’s ongoing ramp-up at the JVML plant, expansion at BPSL, and additional iron ore output from new captive mines in Karnataka and Goa.

 

Adding to the optimistic camp, Motilal Oswal Financial Services (MOFSL) reiterated its ‘Buy’ rating with a Street-high target of ₹1,200, valuing the stock at 8.5x FY27E EV/Ebitda. It noted that Q1 performance, backed by price recovery and lower costs, offset sluggish volume growth. 

 

The brokerage expects double-digit revenue growth through FY26–27 on new capacity ramp-up and stable prices, with Ebitda margins rebounding to 18–19 per cent. It projects ₹62,000 crore in cash flows, sufficient to support JSW’s ₹35,000 crore expansion plans and deleveraging, with net debt/Ebitda expected to fall further from 3.2x.

 

Despite valuation concerns, the Q1 beat and positive domestic demand outlook have prompted most brokerages to revise targets upward. However, the Street remains watchful of Q2 margin pressures, execution timelines, and external factors such as Chinese market dynamics.