JSW Steel share: Buy or sell? What Jefferies, CLSA, Citi, Motilal Oswal and other brokerages are saying after the JFE joint venture announcement

JSW Steel’s announcement of a 50:50 joint venture with Japan’s JFE Steel for Bhushan Power & Steel (BPSL) has triggered a rare spectrum of contrasting brokerage recommendations, ranging from aggressive buy calls to outright sell stances. While several analysts see the restructuring as balance-sheet accretive and strategically aligned with long-term growth, a few have flagged valuation concerns and the potential impact on consolidated earnings once BPSL is deconsolidated.

The divergence in views has widened the target price range dramatically — from ₹890 on the downside to ₹1,400 on the upside — making JSW Steel one of the most hotly debated metal stocks of the season.

Brokerages bullish on leverage reduction and long-term expansion

A cluster of major firms — including Jefferies, MOSL, BoFA Securities, Morgan Stanley and JPMorgan — believe the JV strengthens JSW Steel’s financial position while enabling future expansion with JFE’s technological support.

These brokerages highlighted factors such as:

• Large cash inflows (₹244–₹320 billion depending on the structure)

• A significant reduction in net debt (up to ₹373 billion as some firms estimate)

• Stronger operational and product-mix capabilities through JFE collaboration

• Room to accelerate multi-year expansion plans

Jefferies, the most optimistic, valued the stock at ₹1,400, projecting the biggest upside. MOSL (₹1,350) and BoFA (₹1,290) echoed similar confidence, especially on the deleveraging impact.

Neutral to cautious views flag valuation gaps

Not all brokerages share the enthusiasm.
CLSA, Citi and Nuvama have expressed caution, pointing to high valuation multiples assigned to BPSL and an expected decline in consolidated EBITDA from FY28 onwards.

Key concerns raised include:

• BPSL valued at steep 10x–13x EV/EBITDA multiples compared to peer averages

• Reduction in JSW Steel’s consolidated earnings contribution post deconsolidation

• Potential overvaluation relative to JSW’s own trading multiples

• Uncertainty on medium-term returns from the JV transition

CLSA has set a target of ₹890, while Citi expects ₹915, both below current levels. Nuvama, although acknowledging value accretion, maintains a reduce rating with a ₹1,050 target.

Strategic themes driving brokerages’ divergence

Three major themes appear to be shaping analyst opinions:

a) Balance-sheet strength vs EBITDA shrinkage

Bullish brokerages emphasise debt reduction, while bearish ones point to the loss of BPSL’s full earnings contribution.

b) JV valuation comfort

Some brokerages say the EV of ₹530–₹531 billion is justified by quality and potential; others argue it is a premium.

c) Long-term strategic synergy vs near-term valuation

While institutions such as Jefferies and Morgan Stanley highlight synergy-driven growth, Citi and CLSA say the near-term earnings trade-off warrants caution.

The full brokerage picture at a glance

Brokerage ratings, targets and upside/downside from CMP (₹1,144)

Disclaimer: This article is strictly based on the inputs provided and is for news reporting purposes only. It does not constitute investment advice or stock recommendations.