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JSWSTEEL - Fundamental Analysis: Financial Health & Valuation
Last Updated Time : 05 Nov 25, 7:43 am
Back to Fundamental ListFundamental Rating: 3.5
📊 Financial Overview
- Profitability: PAT declined from ₹2,178 Cr to ₹1,493 Cr QoQ, indicating margin pressure and cyclical softness.
- Return Metrics: ROE at 8.89% and ROCE at 10.2% are modest for a large-cap industrial company.
- Valuation: P/E of 38.8 is significantly above the industry average of 22.4, suggesting overvaluation.
- P/B Ratio: With a book value of ₹341 and price of ₹1,206, P/B is ~3.5, moderately high.
- PEG Ratio: -1.47 reflects earnings contraction and poor growth-adjusted valuation.
- Debt Profile: Debt-to-equity ratio of 0.84 is manageable but elevated for a cyclical sector.
- Momentum: RSI at 68.5 and MACD at 17.5 suggest bullish sentiment but nearing overbought territory.
🏢 Business Model & Competitive Edge
- JSW Steel is one of India’s largest steel producers with integrated operations and global presence.
- Strong backward integration and cost-efficient manufacturing offer scale advantages.
- Strategic investments in green steel and capacity expansion support long-term competitiveness.
💡 Entry Zone Recommendation
- Current price is above both DMA 50 and DMA 200, indicating strong momentum.
- Suggested Entry Zone: ₹1,100–₹1,150 on dips for long-term accumulation.
- Hold for long-term if earnings stabilize and global steel demand improves.
✅ Positive
- Strong brand and market leadership in steel production.
- FII holdings increased by 0.14%, showing foreign investor confidence.
- Momentum indicators suggest bullish trend continuation.
⚠️ Limitation
- High P/E and negative PEG ratio signal valuation concerns.
- Declining quarterly profits and modest ROE/ROCE.
- Debt levels remain elevated for a cyclical sector.
📉 Company Negative News
- QoQ PAT dropped by ₹685 Cr, reflecting margin compression.
- Steel price volatility and global demand uncertainty may impact future earnings.
📈 Company Positive News
- Expansion into green steel and ESG initiatives gaining traction.
- Strong domestic demand and infrastructure push support volume growth.
🏭 Industry
- Steel industry is cyclical, influenced by global commodity prices and infrastructure demand.
- Industry P/E of 22.4 suggests JSW Steel trades at a premium.
🧾 Conclusion
- JSW Steel is a dominant player with long-term growth potential but currently faces valuation and margin headwinds.
- Entry near ₹1,100–₹1,150 offers better risk-reward for long-term investors.
- Monitor global steel trends and debt levels for sustained performance.
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