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Iron Ore Mining Operations – Strong Captive Resource Advantage

JNIL has approvals and operational presence across two captive iron ore mines in Chhattisgarh – Metabodeli (1 MTPA, valid till 2052) and Chotedongar (2.95 MTPA, valid till 2055). Combined, the company currently operates 3 MTPA of iron ore mining against an approved capacity of 4 MTPA. Further, it has applied for expansion by an additional 3 MTPA, for which environmental clearance is expected in next few months. Post approvals, JNIL’s total mining approval will rise to 7 MTPA, ensuring longterm raw material security till 2055.

Pelletisation and Beneficiation – EBITDA Accretive Expansion

JNIL currently operates a 1.5 MTPA pellet plant. The company has announced plans to expand this capacity with a capex of ~ Rs 6400–6500 mn, contingent on funding and cash flows over the next two years. Given the pellet margins of Rs.1,000–1,500 per ton for low-cost miners, this expansion is likely to generate substantial incremental EBITDA. Alongside, the company operates a 1.5 MTPA washery, with an additional 1.5 MTPA capacity expected to be commissioned by October 2025, which will further contribute cost savings of Rs 800–900 mn annually.

Strengthening the Balance Sheet through Debt refinancing

Currently, the company’s debt stands at ~Rs.24,100 mn. In August 2025, JNIL refinanced Rs.23 billion of high-cost NCDs with Tata Capital at a reduced interest rate of 12.5% per annum and 72-month repayment, featuring a debt service reserve and early repayment/ redemption options. Presently, the debt carries a steep 17.5% cost of borrowing, which will be reduced to 12.5% by December 2025. With obligations of Rs.4.79bn and Rs.3.83bn in FY26 and FY27 respectively, internal accruals are expected to comfortably cover repayments. The debt refinancing will help JNIL in reducing financing costs and extending the debt tenor. Furthermore, 100% of the promoter’s shareholding (55.2% as on 30 June 2024) will be pledged with new lenders, with 50% to be released post 50% of the repayment, enhancing financial flexibility.

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Jayaswal Neco Industries has transitioned from a stressed asset to a structurally stronger, integrated steel and mining player. With secure mining leases till 2055, expansion in pelletisation and beneficiation capacities, cost-efficient integrated steel operations, and an ongoing debt optimization exercise, the company is well-positioned to deliver sustainable earnings growth and margin improvement. The successful refinancing of its high-cost debt will further release cash flows for capex and growth, enabling JNIL to emerge as a competitive mid-cap steel player with strong captive resource advantages. The company’s financial flexibility remains constrained due to high promoter pledge, lack of established banking credit relationships, and potential delays in environmental clearance (EC) for mining expansion.

We have valued the company using the EV/EBITDA valuation method, applying a 7x multiple on FY27E earnings, arriving at a target price of Rs 91.

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