In its Q4FY26 results announcement, JSW Steel outlined plans to nearly double its capacity by FY32, accelerating its expansion strategy through a combination of brownfield and greenfield projects, joint ventures and acquisitions to strengthen supply-chain security. The resolution of BPSL (Bhushan Power and Steel) has materially improved the company’s leverage profile, and the management intends to maintain healthy debt levels while executing its sizeable ₹1.26-lakh crore capital expenditure plan over the next five years.

We had recommended that investors accumulate the stock in June 2024 when it was trading at 10.7 times one-year forward EV/EBITDA, and the stock has since delivered a 40 per cent return. Given the similarly positive growth outlook, stronger operating metrics, with improved leverage this time, and the stock continuing to trade at comparable valuation levels of 10.7 times EV/EBITDA, we reiterate our accumulate rating. But considering the geopolitical volatility in the current times, investors should look for a margin of safety in valuations and should accumulate the stock on corrections owing to macroeconomic uncertainty.

Operating metrics

JSW Steel’s sales realisations grew 5.5 per cent year on year in Q4FY26, the first quarter of growth since Q2FY23. Owing to excess imports from China and Vietnam, domestic steel prices were under pressure in the last few years. In April 2025, India applied safeguard duties of 11-12 per cent for the next three years, which has aided domestic steel prices . As Europe applies CBAM from 2026, a form of duties on carbon-intensive production like steel, international prices of steel are also expected to be elevated. With a dual impact of safeguard duties and improved international prices, domestic steel prices are expected to sustain the year-on-year growth in FY27.

The falling realisations in the last four years were buffered by lower raw material costs, primarily of coking coal, and power and fuel. As shown in the table, the EBITDA per tonne has declined but aided by lower raw material costs, the decline was limited. But raw material cost, primarily of coking coal, is increasing now which can partially offset the improved realisations from here. The other costs of power and fuel are expected to improve as low-cost renewable energy is being added. The company plans on 3.5 GW of RE power by FY31-32. The West Asian crisis has had a very limited impact on JSW Steel, as LNG was utilised in smaller amounts at a few facilities which can be managed, as per the company. Overall EBITDA per tonne should improve marginally from here.

Capacity expansion

The company expects to have an installed capacity of 79.5 mtpa (million tonnes per annum) by FY32 (including JVs) from 37.9 mtpa currently, which is a 13 per cent CAGR volume growth on execution. The company expects strong demand for steel in India (8-9 per cent) in the next few years supported by GDP growth, high infra building stage at the central level and demand from auto/construction segments. Indian steel demand has grown at 11 per cent CAGR in the last five years to 163 mtpa in FY26.

As shown in the table, the current capacity includes 31.9 mtpa in India, 1.5 mtpa in Ohio (the US) and 4.5 mtpa in JSW JFE – a 50:50 JV created to house BPSL assets after the slump-sale to a joint venture entity with Japan’s JFE Steel Corporation in FY26. From here, the company has already added 0.9 mtpa in FY27 so far by way of an acquisition (BMM Ispat at an EV of ₹6,400 crore), which is close to JSW Vijayanagar facility in Karnataka. The company will be adding 5 mtpa each in Dolvi by September 2027, Utkal and Vijayanagar by FY30. All of which are existing facilities being expanded. The company will also be adding a 1-mtpa EAF (electric arc furnace) in Kadapa, Andhra Pradesh, which will use scrap metal as a raw material. These additions, which are at various stages of progress on the ground, will increase the installed capacity to 54.8 mtpa (10 per cent CAGR) by FY30. The company has announced a capex programme of ₹1.26 lakh crore with an annual run rate of ₹22,000-24,000 crore per year.

Beyond FY30, JSW Steel’s expansion is expected to reach 63.5 mtpa on its own and 16 mtpa through two JVs by FY32. The first JV is with Japan’s JFE Steel which will expand the existing 4.5-mtpa BPSL capacity by 10 mtpa through joint investment. The company has also entered into a JV with South Korea’s POSCO Steel to develop a 6-mtpa facility in Odisha, by FY32.

Although in stages and staggered, JSW Steel capacity and production should grow at 9-10 per cent CAGR in FY26-32. The company intends to develop a raw material supply chain for 50 per cent of the higher capacity targets for both iron ore and coking coal. The company has 13 of the 25 iron ore mines operational and the rest will come online to support this. The company has acquired coal mines in Mozambique and increased its stake to 30 per cent in an Australian mine as well.

Debt and financials

The company’s net debt has improved from ₹76,500 crore in March 2025 (3.34 times Net debt to EBITDA) to ₹53,800 crore in March 2026 (1.8 times). This was achieved, as after the BPSL resolution, the company transferred the asset to a 50:50 JV with JFE Steel on cash basis at an equity valuation of ₹31,500 crore. The cash flow to JSW Steel, which owned the equity and debt on the asset, allowed for the deleveraging. Final tranche of ₹7,900 crore is also expected, which will further decrease the leverage.

In FY26, the company reported consolidated revenue/EBITDA of ₹1,82,000 crore/26,388 crore (9 per cent/28 per cent growth. With sales of 29.64 mtpa (12 per cent growth), this translates to an EBITDA per tonne of ₹8,900. Assuming the EBITDA per tonne holds or marginally improves as stated earlier, and capacity expands, the company should generate ₹40,000 crore or more of EBITDA per year. Based on cash flow outlook, the company has also revised down the maximum leverage ratio it intends to follow to 3 times from (3.75 times earlier) and a comfortable range of below 2.5 times

JSW Steel outlook on Indian steel consumption growth is now backed by a strong expansion plan to double its capacity. The JV with JFE and POSCO, which are the world’s leading steel producers, derisks the development to an extent and allows for exchange of technology to develop a value-added portfolio as well.

Steel consumption is tied to GDP growth of the country. The current uncertainty will be an overhang on growth till comprehensively resolved. JSW Steel capacity expansion is aimed at a longer horizon and so should the investor focus be.

Published on May 31, 2026