- Revenue rose 11% YoY to INR130 bn, beating consensus.
- Production surged 26% YoY, driven by new Angul capacity.
- Export share slipped to 6%, hinting at a domestic‑focused demand shift.
- Current valuation sits at 8.3× EV/EBITDA for FY27 – a potential discount versus peers.
- Buy rating with a target of INR1,290, implying 8.5× EV/EBITDA on Sep‑27 forecasts.
Most investors missed the quiet surge in Jindal Steel's top line – and that oversight could cost you.
Why Jindal Steel's 11% Revenue Jump Matters for the Indian Steel Cycle
The 11% year‑on‑year increase to INR130 bn is not just a headline number; it signals that Jindal Steel is successfully translating capacity additions into real sales. In an industry where demand is tightly linked to infrastructure spending and private‑sector capital formation, such top‑line momentum often precedes earnings upgrades. For a trader, the key question becomes: is this growth sustainable, or is it a short‑term blip driven by inventory build‑up?
Decoding the Numbers: Production, Sales Volume, and Export Share Trends
Production climbed to 2.51 mt, a 26% rise both YoY and QoQ, largely thanks to the newly commissioned Angul plant. Sales volume followed suit at 2.28 mt, up 20% YoY and 22% QoQ. However, the export component fell from 10% to 6% of total sales. A shrinking export share can be a double‑edged sword: on one hand, it reflects stronger domestic demand; on the other, it exposes the company to policy‑driven consumption cycles. The muted Net Sales Realisation (NSR) in the quarter suggests pricing pressure, but volume strength may offset it if the company can improve its product mix.
EV/EBITDA Valuation: Is 8.3× FY27 Fair or Underpriced?
Enterprise Value to EBITDA (EV/EBITDA) is a core multiple used to gauge relative value, stripping out capital structure differences. Jindal Steel trades at 8.3× for FY27, compared with an industry average of roughly 9.5×. The lower multiple could reflect perceived execution risk around the Angul ramp‑up or concerns about raw‑material cost volatility. If the plant delivers on its capacity targets and margins improve, the multiple could expand toward the sector mean, delivering upside to the INR1,290 target price.
Sector Pulse: How Tata Steel and JSW Are Positioning Against Jindal's Momentum
Peers Tata Steel and JSW Steel have also been expanding capacity, but their growth is more balanced between domestic sales and exports. Tata's export share remains above 15%, providing a hedge against domestic slowdown, while JSW's diversified product line (including high‑grade flat products) gives it pricing power. Jindal's concentration on domestic bulk steel makes it more vulnerable to Indian economic cycles, but it also benefits from the government's push for affordable housing and road projects. Investors should compare margin trajectories: Tata's EBITDA margin has hovered around 12%, JSW around 13%, while Jindal's FY26 estimate sits near 11%—a gap that could narrow if the Angul plant lifts operating leverage.
Historical Echoes: What Past Capacity Expansions Teach Us About Future Earnings
Looking back to 2014‑2016, when Jindal Steel added the Bhilai and Raigarh lines, the company experienced a 3‑year earnings lag before the new capacity translated into higher profit margins. The lag was due to under‑utilisation and higher fixed‑cost absorption. However, the subsequent cycle saw a 15% jump in EBITDA once the plants hit 80% utilization. The current Angul expansion mirrors that pattern: initial volume gains, followed by a period of margin compression before economies of scale kick in. If history repeats, the next 12‑18 months could be the sweet spot for upside.
Investor Playbook: Bull vs. Bear Cases for Jindal Steel
- Bull Case: Angul plant reaches 85% utilization within a year, domestic demand stays robust, EV/EBITDA multiple expands to 9.5×, and margin improves to 12.5% – price target INR1,450.
- Bear Case: Utilization stalls below 70%, raw‑material prices (iron ore, coal) surge, export markets remain weak, multiple contracts to sector average 8× – price target INR950.