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JSTL reported broadly in-line EBITDA of Rs86.3bn (+33% QoQ), supported by stronger realizations and volume growth, while net debt/EBITDA improved to 1.8x. Key highlight of the quarter was the management’s accelerated expansion roadmap, increasing capacity target to 62mt by FY32 (vs 50mt earlier) along with an additional 16mt through JVs with JFE and POSCO, backed by a Rs1.26trn capex pipeline, improving raw material integration, and healthy cash-flow generation. Factoring in safeguard-duty led pricing support and incremental volume from BMM and BF3 ramp-up, we raise FY27/28E EBITDA by 3/9% while increasing our TP by ~8% to Rs1,400 from Rs1,300; reiterate ADD.

Firm realizations support strong quarter

JSTL reported consolidated EBITDA of Rs86.3bn in Q4, largely in line with expectations (up 2.5% vs Emkay; 1.3% vs consensus; 32.9% QoQ). The sequential improvement was mainly driven by a strong pricing environment and 4.3% QoQ increase in sales volume to 8mt, which was partly offset by higher coking coal costs. Consolidated EBITDA/t stood at Rs10,833 in Q4, at a 27.4% QoQ increase and in line with market expectations. Net debt declined to Rs538.7bn, driven by structural deleveraging by the BPSL transaction, while net debt-to-EBITDA declined to 1.81x in 4QFY26 vs 2.91x in 3QFY26. JSTL has declared a dividend of Rs7.1/share for FY26.

Disciplined scale-up, through strong cash flows and integration

JSTL has outlined an accelerated growth roadmap, raising its domestic steelmaking capacity target to 62mt by FY32 (50mt by FY31, earlier), mainly led by brownfield expansions across existing assets. Key projects include Vijayanagar ramp-up to 25mt, Dolvi expansion to 15mt, and the first 5mt phase at Utkal by FY30, alongside pellet, slurry pipeline, and downstream value-added capacity adds. Further, JVs with JFE and POSCO are expected to add 16mt by FY32, taking aggregate India capacity (incl JVs) to 78mt. The expansion is being backed by higher RM integration, with the mgmt targeting ~50% captive sourcing for both iron ore and coking coal via higher ownership in the Illawarra coal asset and additional Goa iron-ore capacity. JSW has approved a Rs1.26trn capex pipeline over the next 4-5Y, while maintaining balance-sheet discipline with net debt/EBITDA target of <2.5x. Given JSTL’s strong execution track record and phased commissioning approach, we view the expansion strategy positively, with incremental growth expected to be aided by healthy operating cash flow generation over the cycle.

Earnings outlook improves on stronger volumes and pricing support

We expect JSTL earnings to strengthen over FY27-28E, supported by a favorable pricing environment aided by safeguard duty and 9% volume growth in FY27; this would be driven by incremental contributions from BMM and ramp-up of BF-3 from Q2 onward. Accordingly, we raise our FY27/28 EBITDA estimates by 3%/9% to Rs355bn/Rs417bn, respectively, and increase our TP by 7.7% to Rs1,400 from Rs1,300; reiterate ADD.

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