JSW Steel stock: Brokerages maintain bullish outlook as Q2 net profit rises three times

Shares of JSW Steel Ltd, India's largest steelmaker by capacity, are in focus today after the firm reported a three-fold year-on-year rise in its consolidated net profit in Q2. The Q2 earnings reflected record steel sales and firm flat steel prices offset, which elevated coking coal costs.

The Q2 earnings beat estimates with brokerages mostly holding a positive outlook on the stock.

Jefferies has a price target of Rs 1650 on the stock in the base case scenario, reflecting an upside of 39%. In upside scenario, the target is Rs 1800, a gain of 52%.

In the downside scenario, the target is Rs 1050, a downside of 12%.

"JSW Steel remains our top Buy in India metals. We raise FY27-29E EPS by 2-4%, and we are 35-40% above street; we expect EPS to treble over FY26-29. JSTL's Sep-Q EBITDA rose 8% QoQ, inline with JEFe. We expect margins to expand as the 15% rise in India steel prices since Aug-26 more than offsets higher costs. The announced 10mt expansions further strengthen visibility on JSTL's target to double capacity by FY32. At 8x 1Y forward EV/EBITDA, valuation is justified," said the brokerage.

"We retain Buy with unchanged Rs 1,650 PT based on 10x Sep-28E EV/EBITDA, implying 2.7x Sep-28E P/B," added the global investment bank.

MOSL said earnings beat was driven by strong volumes and outlook for the firm was robust. 
The brokerage retained its buy rating post Q2 earnings. "At CMP, JSW Steel trades at 6.9x FY28E EV/EBITDA. We largely retain our FY28 earnings estimate and reiterate our BUY rating on the stock with a TP of Rs 1,460, valued on SoTP basis," said MOSL.

Brokerage Systematix said that the firm reported a strong performance in the second quarter of FY27, driven by record production volumes, higher capacity utilisation and improved performance across its overseas operations.

Operational momentum is expected to strengthen further in the second half of FY27. Higher steel realisations and a favourable product mix are likely to cushion the impact of an anticipated $25 per tonne increase in coking coal costs in the December quarter.

The brokerage has raised its FY27 estimated EBITDA by 14%, factoring in stronger-than-expected operating performance. Its FY28 EBITDA forecast remains broadly unchanged, while estimates for FY29 have been introduced.
 
The brokerage values JSTL at 9.5 times its estimated EBITDA for the 12 months ending September 2028. It has also factored in the value of the company's 50% stake in JJSL, estimated at Rs 15800 crore, to arrive at a revised target price of Rs 1,515 per share, implying an upside potential of 28%.

The brokerage has maintained its BUY rating on the stock.

Key risks for the brokerage's assumptions are weaker steel prices, higher input costs and delays in project execution.

Q2 earnings 

JSW Steel reported a 225.3% year-on-year (YoY) jump in consolidated profit after tax (PAT) to Rs 5,279 crore in Q2 compared with Rs 1,623 crore in the corresponding quarter of the previous financial year.

Revenue from operations rose 10.7% YoY to Rs 54,486 crore in the July-September quarter of FY27, while the company had reported revenue of Rs 49,152 crore in the year-ago period.

The steelmaker's total income increased to Rs 54,927 crore in the September quarter from Rs 45,436 crore in the corresponding period last year.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) climbed 42.2% YoY to Rs 10,120 crore in Q2 FY27, compared with Rs 7,115 crore in Q2 FY26.

On a sequential basis, EBITDA grew 6%, supported by higher sales volumes. However, the improvement was partly offset by increased coking coal prices and lower steel realisations.