Tata Steel, SAIL offer 20-28% upside; JSW Steel's valuation beyond comprehension: InCred
JSW Steel, InCred said, trades at an unjustifiable 4 times FY26F book value, far exceeding any reasonable metric for a cyclical business.
- Oct 27, 2025,
- Updated Oct 27, 2025 11:42 AM IST
InCred Equities has in its latest notes on steel stocks upgraded Tata Steel on likely recovery in European operation and PSU Steel Authority of India (SAIL) on stable steel prices under a protectionist regime. It sees 20-28 per cent upsides on the two counters. JSW Steel, InCred said, trades at an unjustifiable 4 times FY26F book value, far exceeding any reasonable metric for a cyclical business.
Tata Steel is seen gaining from a major steel demand revival in Europe as the Russia-Ukraine war approaches a negotiated conclusion. The India business provides solid visibility through FY30, underpinned by policy protectionism and strong domestic demand, InCred Equities said. Tata Steel has historically found strong support near 1 times price to book value (P/BV) level and currently trades around 1.9 times.
"Applying a 2.5 times P/BV multiple to FY27F/Sep 2027F BV (Rs 90) yields a fair value of Rs 224, implying healthy upside from current levels. We upgrade our rating to ADD (from REDUCE earlier), viewing Tata Steel as a leveraged play on India’s industrial upcycle and Europe’s post-war reconstruction boom," InCred said.
In the case of SAIL, the stock has been upgraded to 'ADD' with a target price of Rs 158, implying a 20–25 per cent upside, driven by stable steel prices under a protectionist regime.
"The company’s captive iron ore advantage ensures long-term cost competitiveness, shielding margins from raw material volatility. Earnings recovery to be led by volume growth & operating leverage," InCred said.
SAIL’s biggest competitive advantage remains its fully integrated raw material base. Unlike private steelmakers such as Tata Steel or Jindal Steel and Power (JSPL), which will be affected by the mandatory auction of captive mines under the MMDR Act, 2015, SAIL’s public sector undertaking (PSU) status allows it to retain legacy iron ore mines beyond FY30.
"We estimate SAIL’s Ebitda/tonne to remain steady at Rs 7,000–8,000 over FY24–26F, with EPS growing around 8 per cent annually. The valuation remains reasonable at 1x P/BV, close to the long-term average, and below peak-cycle multiples. Given its strong balance sheet, declining leverage, and policy-driven insulation, SAIL offers limited downside and a visible near-term upside," InCred said.
On JSW Energy, InCred Equities said while the company’s execution and project delivery are exemplary, persistent leverage and unrealistic earnings forecasts remain key risks.
"Consensus estimate of Rs 34,000 crore Ebitda in FY26F is highly optimistic — the valuation defies fundamentals and relies solely on sentiment," it said.
InCred Equities has in its latest notes on steel stocks upgraded Tata Steel on likely recovery in European operation and PSU Steel Authority of India (SAIL) on stable steel prices under a protectionist regime. It sees 20-28 per cent upsides on the two counters. JSW Steel, InCred said, trades at an unjustifiable 4 times FY26F book value, far exceeding any reasonable metric for a cyclical business.
Tata Steel is seen gaining from a major steel demand revival in Europe as the Russia-Ukraine war approaches a negotiated conclusion. The India business provides solid visibility through FY30, underpinned by policy protectionism and strong domestic demand, InCred Equities said. Tata Steel has historically found strong support near 1 times price to book value (P/BV) level and currently trades around 1.9 times.
"Applying a 2.5 times P/BV multiple to FY27F/Sep 2027F BV (Rs 90) yields a fair value of Rs 224, implying healthy upside from current levels. We upgrade our rating to ADD (from REDUCE earlier), viewing Tata Steel as a leveraged play on India’s industrial upcycle and Europe’s post-war reconstruction boom," InCred said.
In the case of SAIL, the stock has been upgraded to 'ADD' with a target price of Rs 158, implying a 20–25 per cent upside, driven by stable steel prices under a protectionist regime.
"The company’s captive iron ore advantage ensures long-term cost competitiveness, shielding margins from raw material volatility. Earnings recovery to be led by volume growth & operating leverage," InCred said.
SAIL’s biggest competitive advantage remains its fully integrated raw material base. Unlike private steelmakers such as Tata Steel or Jindal Steel and Power (JSPL), which will be affected by the mandatory auction of captive mines under the MMDR Act, 2015, SAIL’s public sector undertaking (PSU) status allows it to retain legacy iron ore mines beyond FY30.
"We estimate SAIL’s Ebitda/tonne to remain steady at Rs 7,000–8,000 over FY24–26F, with EPS growing around 8 per cent annually. The valuation remains reasonable at 1x P/BV, close to the long-term average, and below peak-cycle multiples. Given its strong balance sheet, declining leverage, and policy-driven insulation, SAIL offers limited downside and a visible near-term upside," InCred said.
On JSW Energy, InCred Equities said while the company’s execution and project delivery are exemplary, persistent leverage and unrealistic earnings forecasts remain key risks.
"Consensus estimate of Rs 34,000 crore Ebitda in FY26F is highly optimistic — the valuation defies fundamentals and relies solely on sentiment," it said.