Morgan Stanley has reiterated its Overweight rating on JSW Steel with a target price of ₹1,300, citing the company’s strengthened strategic position following its partnership with Japan’s JFE Steel. The brokerage said JSW is now better placed to capitalise on long-term steel demand, technological upgrades, and large-scale project execution opportunities.
According to Morgan Stanley, the newly structured venture gives JSW access to JFE’s advanced technological expertise, while leveraging JSW’s strong execution capability to participate in what it calls “multi-decade growth opportunities” across India’s steel industry.
A key highlight of the note is JFE’s planned ₹158 billion investment, to be infused in two tranches for a 50% stake in the new entity. This investment implies an equity valuation of ₹315 billion for the venture.
Morgan Stanley added that JSW Steel stands to receive substantial liquidity through multiple channels. The company will get ₹245 billion in cash from the slump sale of its stake to the new entity. In addition, JSW will receive ₹79 billion through equity dilution under a share-swap arrangement with the promoter company, which currently holds 17% in Bhushan Power & Steel (BPSL).
This brings the total inflow to approximately ₹324 billion, strengthening JSW’s balance sheet and funding capacity.
The report further notes that the estimated enterprise value (EV) of BPSL is around ₹530 billion, comprising ₹315 billion equity, ₹50 billion of existing debt, and ₹165 billion in additional debt to be raised by the new entity.
At the current market price of ₹1,144, Morgan Stanley believes the risk–reward remains favourable, supported by improved capital structure, strategic partnerships, and long-term demand visibility.
Disclaimer: This article is based solely on the brokerage note shared and does not constitute investment advice. Investors should consult a qualified financial adviser before making investment decisions.
