Whalesbook
Jindal Steel Set for Profit Surge on Expansion Drive, Antique Reiterates 'Buy'
Brokerage firm Antique Stock Broking has issued a strong 'Buy' recommendation for Jindal Steel (JSL), projecting significant profit growth driven by substantial expansions at its Angul facility. The firm has established a target price of ₹1,171 per share, indicating considerable upside potential.
The Core Issue: Angul Expansion Drives Capacity
The cornerstone of Antique's optimism lies in JSL's ambitious expansion plans at its Angul integrated steel plant. The company has recently commissioned key facilities, including India's largest blast furnace (BF-II; 4.6 mtpa) and a basic oxygen furnace (BOF-II; 3 mtpa). These additions are pivotal in the company's strategy to escalate its liquid steel-making capacity from 9.6 mtpa to 15.6 mtpa and finished steel capacity from 7.3 mtpa to 13.8 mtpa by FY27. Angul is projected to become the world's largest single-location steel-making complex by 2030.
Financial Implications: Margin Boost and Funding
Antique believes that cost efficiencies will be a major tailwind for JSL's profitability. Increased captive coal production, the operational slurry pipeline, and higher captive power generation are expected to significantly support margins. The brokerage also highlighted JSL’s robust balance sheet, which is well-positioned to fund the ongoing Phase II expansion plans without raising major concerns about debt levels.
Market Reaction and Demand Dynamics
While Jindal Steel shares were trading slightly down at ₹1,005.20 on Wednesday afternoon, Antique's target price of ₹1,171 suggests a strong upward trajectory. The brokerage noted that domestic steel prices have softened marginally quarter-on-quarter, but recent signs of recovery in spot hot-rolled coil (HRC) and rebar prices offer encouragement. Provisional data indicates a healthy 7.4% year-on-year rise in finished steel consumption between April and November 2025, with a seasonal demand uptick anticipated.
Value-Added Products Fuel Profitability
A key factor driving profitability is JSL's increasing focus on value-added products (VAPs). The share of VAPs in its sales mix surged to 73% in 2QFY26 from 58% in 2QFY25. Management has guided FY26 sales volumes between 8.5–9.0 MT, up from 8.0 MT in FY25, primarily due to the new Angul blast furnace. Higher volumes are expected to drive top-line growth despite softer overall steel prices.
Operational Enhancements and Ongoing Projects
The ramp-up of BF-II, BOF-II, and a 6 mtpa hot strip mill is set to boost volume growth and expand the flat product portfolio. Further enhancements include the commissioning of a 1,710 TPD oxygen plant and its first continuous galvanizing line. Ongoing expansions at Angul, such as BOF-III, Pellet Plant II, and the 1,050 MW Shreebhoomi power plant, are progressing as per schedule.
Captive Resources Ensure Self-Sufficiency
JSL's commitment to captive resources is enhancing its operational advantage. Five thermal coal blocks are operational, with Utkal B1 mining set to commence soon. Captive coal met 96% of 2QFY26 requirements, aiming for full self-sufficiency. Iron ore output from its mines is also increasing, supported by the nearing completion of the slurry pipeline and coal pipe conveyor.
Strong Balance Sheet and Disciplined Leverage
Antique noted JSL's consolidated net debt stood at ₹14,160 crore at the end of 2QFY26, representing a leverage ratio (net debt to Ebitda) of 1.48x, which is competitive among Indian peers. Despite projected annual capex of ₹7,500–10,000 crore for FY26, the company's disciplined capital allocation is expected to fund expansions without significant debt escalation concerns.
Impact
This recommendation and positive outlook from a reputable brokerage could significantly boost investor confidence in Jindal Steel. Potential stock price appreciation is expected if the company executes its expansion and efficiency plans successfully. The development could also spur positive sentiment within the broader Indian steel sector.
Impact Rating: 8/10
Difficult Terms Explained
- EV/Ebitda: Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization. A valuation metric used to assess a company's total worth relative to its operational cash flow.
- Captive Coal: Coal mines owned and operated by a company to supply its own energy needs, reducing external procurement costs and ensuring supply stability.
- Slurry Pipeline: A pipeline system designed to transport materials like coal or ore in a liquid mixture.
- Captive Power Generation: Electricity generated by a company for its own consumption, independent of public utilities.
- Blast Furnace (BF): A high-temperature furnace used for smelting iron ore and producing pig iron, a primary material for steel production.
- Basic Oxygen Furnace (BOF): A furnace that refines pig iron into steel by blowing high-purity oxygen through the molten metal.
- mtpa: Million tonnes per annum, a standard measure for large-scale industrial production capacity.
- Value-Added Products (VAPs): Steel products that have undergone further processing or customization to enhance their functionality or market appeal beyond basic steel forms.
- Hot-Rolled Coil (HRC): Steel sheets produced via a hot-rolling process, commonly used in automotive and construction industries.
- Rebar: Steel bars used as a tension device in reinforced concrete structures to strengthen and aid the concrete under tension.
- Joint Plant Committee (JPC): An organization that collects and disseminates data related to the Indian steel industry.
- TPD: Tonnes Per Day, a measure of daily production capacity.
- Leverage: The extent to which a company uses borrowed money (debt) to finance its assets. Measured here by the net debt to Ebitda ratio.
- Capex: Capital Expenditures, funds used by a company to acquire, upgrade, and maintain physical assets like property, buildings, and equipment.