Nuvama Institutional Equities has maintained its buy rating on Jindal Steel Limited while cutting the target price to ₹1,264 from ₹1,400, citing near-term pressure from weaker steel prices and higher cost of production. At the current market price of ₹1,014, the revised target still implies an upside of around 25%.
In its note, Nuvama Institutional Equities flagged a “double whammy” for the steel sector, with falling steel prices and elevated costs expected to compress spreads in the near term. The brokerage expects steel spreads to weaken through the coming quarters, but sees a bottom forming in Q3FY26, with EBITDA per tonne for Jindal Steel estimated at ₹8,200, down ₹1,800 per tonne quarter-on-quarter.
Despite the near-term headwinds, Nuvama highlighted that Jindal Steel already has capacity in place, positioning the company to deliver a 17% volume CAGR over FY25–FY28E. Over the medium term, a recovery in steel prices is expected to support a 28% EBITDA CAGR across the same period.
To reflect the softer pricing environment, Nuvama has cut its EBITDA estimates for FY26E, FY27E and FY28E by 16%, 13% and 7%, respectively. However, the brokerage continues to factor in an average steel price hike of ₹3,000 per tonne in Q4FY26, which is expected to aid earnings recovery.
Looking ahead, Nuvama expects EBITDA per tonne to expand by ₹3,500–₹4,000 in FY27–FY28E over FY26E, driven by higher volumes, improved realisations and cost reduction measures. These factors underpin its continued positive stance on the stock despite the downward revision in near-term estimates.
Disclaimer: This article is for informational purposes only. The views expressed are those of the brokerage and do not constitute investment advice or a recommendation to buy or sell any security.
