Motilal Oswal Sees Upside Potential in Jindal Steel, Targets Rs 1400

Jindal Steel Posts Strong Quarterly Growth, Beats Estimates

Jindal Steel's revenue for the fourth quarter of fiscal year 2026 (4QFY26) stood at INR162 billion, marking a significant 23% year-over-year (YoY) and 25% quarter-over-quarter (QoQ) growth. This surpasses the research firm's estimate of INR145 billion for the quarter.

The company's production during 4QFY26 reached 2.65 million tonnes, a notable 26% YoY and 6% QoQ increase. The growth was primarily driven by the newly added Angul capacity. Meanwhile, sales volume stood at 2.6 million tonnes, a 23% YoY and 15% QoQ increase. The share of exports declined to 5% in 4QFY26, down from 6% in 3QFY26.

Net realization rose 8% QoQ to INR61,000 per tonne, despite being flat YoY, due to a strong recovery in steel prices during the quarter. Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (Adj. EBITDA) stood at INR27 billion, a 7% YoY and 66% QoQ increase against the research firm's estimate of INR22 billion. This translates into an EBITDA per tonne of INR10,100, down 13% YoY and up 45% QoQ.

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Research Firm Cuts EBITDA Estimates for FY27

In light of the increase in coal costs and the gradual improvement in volumes, the research firm has cut its EBITDA estimates for fiscal year 2027 (FY27) by 9%. Estimates for fiscal year 2028 (FY28) remain largely unchanged. At the current market price, the stock trades at 7.8x Enterprise Value to EBITDA on FY28 estimates.

Recommendation

Based on the revised estimates, the research firm reiterates its BUY rating for Jindal Steel with a target price of INR1,400. The target price is based on an Enterprise Value to EBITDA multiple of 8.5x on the FY28 estimate.

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