Equities. Commodities. Metals & Mining

Rahul Jain

Equity Bottom-Up

<ul>
<li>JSW Steel has grown its domestic steelmaking capacity at CAGR of 14% over the last 2 decades (2x industry) and at 25% lower costs</li>
<li>Gradual capacity ramp-up at recently completed expansion at Vijayanagar (5m) and actively pursuing 10-15mt of new capacity additions over the next 3-5 years</li>
<li>Valuations: JSW Steel trades at premium to its 5yr average EV/EBITDA likely due to a) impending imposition of a 12% safeguard duty b) superior capital allocation etc.</li>
</ul>


JSW Steel has grown its domestic steelmaking capacity at CAGR of 14% over the last 2 decades (2x industry) and at 25% lower costs
Gradual capacity ramp-up at recently completed expansion at Vijayanagar (5m) and actively pursuing 10-15mt of new capacity additions over the next 3-5 years
Valuations: JSW Steel trades at premium to its 5yr average EV/EBITDA likely due to a) impending imposition of a 12% safeguard duty b) superior capital allocation etc.


JSW Steel: Low Cost Capacity Expansion Underpin Premium Valuations

Senior Credit Analyst, Lucror Analytics

Leonard Law, CFA

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

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Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Credit

<ul>
<li>In the US, the S&amp;P preliminary services PMI fell to 52.8 (56.5 e / 56.8 p), while the manufacturing PMI edged up to 50.1 (49.8 e / 49.4 p).</li>
<li>The preliminary composite PMI declined to 52.4 (55.6 e / 55.4 p). Separately, the January (final) University of Michigan consumer sentiment index decreased to 71.1 (74.0 p).</li>
<li>Treasuries climbed slightly, following the weaker than expected January preliminary PMI data. </li>
</ul>


In the US, the S&amp;P preliminary services PMI fell to 52.8 (56.5 e / 56.8 p), while the manufacturing PMI edged up to 50.1 (49.8 e / 49.4 p).
The preliminary composite PMI declined to 52.4 (55.6 e / 55.4 p). Separately, the January (final) University of Michigan consumer sentiment index decreased to 71.1 (74.0 p).
Treasuries climbed slightly, following the weaker than expected January preliminary PMI data. 


Trung Nguyen

<ul>
<li>Incorporated in India, JSW Steel was established in 1994 and listed on the Indian stock exchange in 1995.</li>
<li>The company is the largest steel producer in the country (only taking into account capacity in India) and seventh-largest in the world.</li>
<li>It had 34.7 mtpa of capacity at FYE 2023-24, most of which was based in India (33.2 mtpa). </li>
</ul>


Incorporated in India, JSW Steel was established in 1994 and listed on the Indian stock exchange in 1995.
The company is the largest steel producer in the country (only taking into account capacity in India) and seventh-largest in the world.
It had 34.7 mtpa of capacity at FYE 2023-24, most of which was based in India (33.2 mtpa). 


<ul>
<li>JSW Steel has released Q2/24-25 numbers that were weaker than expected in our view, with a yoy decline in revenue, significantly larger decrease in earnings, material negative FCF (owing to lower steel prices) and narrower margins (due to a surge in cheap imports, particularly from China).</li>
<li>The balance sheet deteriorated, with debt increasing and earnings softening. Liquidity also weakened.</li>
<li>While the company has guided for improvement in H2/24-25, it did not provide credible justification for this during the earning call besides noting that JSW raised selling prices in October 2024. </li>
</ul>


JSW Steel has released Q2/24-25 numbers that were weaker than expected in our view, with a yoy decline in revenue, significantly larger decrease in earnings, material negative FCF (owing to lower steel prices) and narrower margins (due to a surge in cheap imports, particularly from China).
The balance sheet deteriorated, with debt increasing and earnings softening. Liquidity also weakened.
While the company has guided for improvement in H2/24-25, it did not provide credible justification for this during the earning call besides noting that JSW raised selling prices in October 2024. 


JSW Steel - Earnings Flash - Q2 FY 2024-25 Results - Lucror Analytics

Thematic (Sector/Industry)

<ul>
<li>U.S. tariff surprises triggered a sharp correction in global commodity prices and Indian metal stocks.</li>
<li>Despite limited U.S. exposure, Indian metal producers were hit hard—despite strong domestic demand and top-tier cost positioning.</li>
<li>Valuation reset appears overdone; further dips offer a compelling entry point. Vedanta, JSW Steel, Jindal Steel and Power and NMDC are best bets in our view. </li>
</ul>


U.S. tariff surprises triggered a sharp correction in global commodity prices and Indian metal stocks.
Despite limited U.S. exposure, Indian metal producers were hit hard—despite strong domestic demand and top-tier cost positioning.
Valuation reset appears overdone; further dips offer a compelling entry point. Vedanta, JSW Steel, Jindal Steel and Power and NMDC are best bets in our view. 


Tariff Shock Creates Overreaction: Indian Metal Stocks Poised for a Tactical Rebound

India

JSW Steel Limited is an integrated steel producer with manufacturing facilities in Karnataka, Tamil Nadu and the western state of Maharashtra. The Company produces products including hot rolled coils, cold rolled coils, wire rods, galvanized coils and sheets.

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JSW Steel Ltd (JSTL IN)

JSW Steel: Low Cost Capacity Expansion Underpin Premium Valuations

JSW Steel has significantly increased its steelmaking capacity in India, with plans for further expansion in the next few years, leading to...

Rahul Jain

Lucror Analytics - Morning Views Asia

In the US, the S&P preliminary services PMI fell to 52.8 (56.5 e / 56.8 p), while the manufacturing PMI edged up to 50.1 (49.8 e / 49.4 p).

Lucror Analytics

JSW Steel - ESG Report

The company is the largest steel producer in the country (only taking into account capacity in India) and seventh-largest in the world.

Lucror Analytics

JSW Steel - Earnings Flash - Q2 FY 2024-25 Results - Lucror Analytics

JSW Steel has released Q2/24-25 numbers that were weaker than expected in our view, with a yoy decline in revenue, significantly larger decrease in...

Lucror Analytics

Tariff Shock Creates Overreaction: Indian Metal Stocks Poised for a Tactical Rebound

U.S. tariff shocks led to a global commodity price drop, impacting Indian metal stocks despite strong fundamentals. Valuation reset may present...

Rahul Jain

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Market Cap (USDm)

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JSW Steel: Low Cost Capacity Expansion Underpin Premium Valuations

​JSW Steel has significantly increased its steelmaking capacity in India, with plans for further expansion in the next few years, leading to...

Rahul Jain

Lucror Analytics - Morning Views Asia

In the US, the S&P preliminary services PMI fell to 52.8 (56.5 e / 56.8 p), while the manufacturing PMI edged up to 50.1 (49.8 e / 49.4 p).

Lucror Analytics

JSW Steel - ESG Report

The company is the largest steel producer in the country (only taking into account capacity in India) and seventh-largest in the world.

Lucror Analytics

JSW Steel - Earnings Flash - Q2 FY 2024-25 Results - Lucror Analytics

JSW Steel has released Q2/24-25 numbers that were weaker than expected in our view, with a yoy decline in revenue, significantly larger decrease in...

Lucror Analytics

Tariff Shock Creates Overreaction: Indian Metal Stocks Poised for a Tactical Rebound

​U.S. tariff shocks led to a global commodity price drop, impacting Indian metal stocks despite strong fundamentals. Valuation reset may present...

Rahul Jain

JSW Steel has significantly increased its steelmaking capacity in India, with plans for further expansion in the next few years, leading to...

U.S. tariff shocks led to a global commodity price drop, impacting Indian metal stocks despite strong fundamentals. Valuation reset may present...