The shares of this leading Indian steel producer with significant presence in sectors like mining and power generation are in focus after leading brokerage Nuvama has initiated a buy call for an upside potential of 31 percent. In this article, we will discuss what made the brokerage assign this rating.
With a market capitalisation of Rs 94,455 crores, the shares of Jindal Steel and Power Ltd are currently trading at Rs 926 per share, down by 14.6 percent from its 52-week high of Rs 1,083.65 per share. Over the past five years, the stock has delivered an impressive return of 501 percent.
Leading globerage firm Nuvama has given a Buy rating on Jindal Steel & Power with a target price of Rs 1,193, signalling an upside potential of 31 percent from its Monday’s closing price of Rs 910.70.
Nuvama sees the valuation attractive, largely due to seasonal weakness, as a solid buying opportunity. The brokerage believes that the company’s EBITDA will almost double by FY27, based on the commissioning of a 4.6 mtpa blast furnace, in the early part of Q2 FY26, and a 3 mtpa basic oxygen furnace (BoF), at the end of the same quarter. Notably, the capacity expansion is expected to drive JSPL’s volume growth to 19 percent CAGR, FY25-27, from just 1 percent in FY22-25.
In addition, there are numerous EBITDA tailwinds with a more favourable product mix, cost efficiencies, and steel prices stabilising. Nuvama expects RoCE to improve from 11 percent in FY25 to 20 percent in FY27, as it anticipates a high EBITDA CAGR of 41 percent. JSPL also has the lowest leverage in its peer group, where it expects net debt to EBITDA to fall from 1.3x in FY25 to 0.4x by FY27.
JSPL is looking at a Rs 47,000 crore capex plan, of which already more than half is done, but is still expected to be in positive free cash flow (FCF) in FY27. Moreover, its investment case is excellent, reflected in its balance sheet and relative earnings growth profile are well above the rest of the steel sector.
Financial Highlights
JSPL reported a consolidated revenue of Rs 49,765 crores in FY25, down by 1.17 percent from its FY24 revenue of Rs 50,354 crores. Additionally, it posted a net profit of Rs 2,846 crores in FY25, down by 52.12 percent from its FY24 net profit of Rs 5,943 crores.
Jindal Steel & Power Limited is an Indian diversified steel, mining, and infrastructure company with operations both within India and internationally. The company produces various steel products such as TMT rebars, wire rods, rails, plates, beams, and hot-rolled coils.
Jindal Steel & Power Limited also manufactures cathode bars for the aluminium industry, structural steel products, and sponge iron. It further supplies cement as Jindal Panther and owns coal and iron ore mines located in different areas.
Written by Satyajeet Mukherjee
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