CLSA has assigned an Underperform rating on JSW Steel with a target price of ₹890, even as it acknowledged that the company’s latest restructuring of Bhushan Power & Steel (BPSL) is fundamentally positive for leverage, valuation, and long-term strategic positioning.
JSW Steel has announced the divestment and deconsolidation of BPSL into a new joint venture with Japan’s JFE Steel. Under the agreement, JSW Steel’s effective stake will fall from 83% to 50%, while JFE will acquire the remaining 50% stake—with 33% sold by JSW and 17% by the promoter group.
CLSA said the deal values BPSL at ₹530 billion, translating into approximately US$1,400 per tonne of capacity, and a forward EV/EBITDA multiple of around 13x. At this valuation, the brokerage expects JSW Steel to see a meaningful reduction in leverage and an estimated value accretion of ₹30–₹70 per share.
The brokerage added that the partnership provides JFE with operational access to one of the world’s fastest-growing steel markets, and offers JSW technological depth and strong balance-sheet support. CLSA believes the transaction is strategically sound and expects the market to react positively.
However, despite the long-term benefits, the brokerage maintained an Underperform stance, signalling that much of the upside may already be reflected in the stock’s current price.
JSW Steel’s current market price (CMP) stands at ₹1,144.
Disclaimer: This article is based solely on the brokerage note provided and does not constitute investment advice. Investors should consult a financial adviser before making investment decisions.
