Why Is Nuvama Bullish on Jindal Steel Despite Q2 Weakness?
About Jindal Steel and Power
Jindal Steel and Power Ltd. (JSPL) remains one of India’s top integrated steel producers, with diversified operations across steel, power, and mining. Despite short-term challenges in Q2FY26, the company maintains strong fundamentals and is expected to benefit from rising volumes, better cost management, and upcoming price hikes in Q3FY26.
Nuvama’s Key Observations
| Parameter | Detail |
|---|---|
| Target / Rating | ₹1,400 (vs ₹1,426 earlier) | Buy maintained |
| Q2FY26 EBITDA | ₹1,875 Cr — broadly in line; includes ₹250 Cr one-off from plant shutdown |
| Net Debt | Down ₹240 Cr QoQ to ₹14,150 Cr, showing balance-sheet discipline |
| EBITDA Outlook | FY26E/FY27E EBITDA cut by 14%/2% due to near-term weakness; long-term intact |
| Valuation Method | 7× FY28E EV/EBITDA — implies room for rerating on volume-led recovery |
Earnings and Recovery Outlook
- Q2FY26 earnings impacted by temporary plant shutdown but expected to normalize from Q3 onward.
- Improved utilization rates and new capacity ramp-ups to drive higher volume growth in FY26–27.
- Input cost pressures (coal and freight) are easing, providing scope for margin recovery.
- Management confident of achieving 8–10 % YoY growth in steel dispatch volumes in H2FY26.
- Targeting balance-sheet deleveraging below ₹13,500 Cr by FY26-end through operational cash flows.
SWOT and Valuation View
- Strength: Fully integrated operations, diversified raw-material sourcing, and low-cost structure.
- Weakness: Sensitivity to steel cycle fluctuations and export duty changes.
- Opportunity: Strong domestic infrastructure demand and policy-driven capex momentum.
- Threat: Volatility in global steel prices and input costs could limit short-term margin expansion.
Investment Verdict
Nuvama reiterates a Buy on Jindal Steel, highlighting a temporary Q2 dip rather than a structural slowdown. The medium-term thesis remains supported by volume growth, improved cost efficiency, and strong balance sheet management. The ₹1,400 target implies meaningful upside once margins normalize in FY26–27.
Investor Takeaway
Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, notes that Jindal Steel’s near-term volatility offers a tactical buying window. With reduced leverage and improving price environment, the stock remains well-positioned for long-term re-rating.
Discover more insights at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
Related Queries on Jindal Steel
- What are the brokerage targets for Jindal Steel after Q2FY26?
- Will lower coal costs boost Jindal Steel margins in FY27?
- How does the FY28 EV/EBITDA valuation compare with peers?
- Is Jindal Steel still a buy for long-term investors?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
