JSWSTEEL - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.2
| Stock Code | JSWSTEEL | Market Cap | 2,91,628 Cr. | Current Price | 1,192 ₹ | High / Low | 1,245 ₹ |
| Stock P/E | 40.5 | Book Value | 341 ₹ | Dividend Yield | 0.23 % | ROCE | 10.2 % |
| ROE | 8.89 % | Face Value | 1.00 ₹ | DMA 50 | 1,162 ₹ | DMA 200 | 1,097 ₹ |
| Chg in FII Hold | -0.18 % | Chg in DII Hold | 0.19 % | PAT Qtr | 979 Cr. | PAT Prev Qtr | 1,493 Cr. |
| RSI | 53.6 | MACD | 18.4 | Volume | 8,85,974 | Avg Vol 1Wk | 25,14,867 |
| Low price | 905 ₹ | High price | 1,245 ₹ | PEG Ratio | -1.54 | Debt to equity | 0.84 |
| 52w Index | 84.3 % | Qtr Profit Var | -28.4 % | EPS | 26.5 ₹ | Industry PE | 20.7 |
📊 Financials: JSWSTEEL shows moderate fundamentals with ROCE at 10.2% and ROE at 8.89%, reflecting below-average capital efficiency for a large-cap steel producer. Debt-to-equity ratio of 0.84 indicates a leveraged balance sheet. Quarterly PAT declined from 1,493 Cr. to 979 Cr., with a negative profit variation of -28.4%, highlighting earnings pressure. EPS of 26.5 ₹ is modest relative to market cap, while cash flows remain sensitive to commodity cycles.
💹 Valuation: Current P/E of 40.5 is significantly higher than the industry average of 20.7, suggesting overvaluation. P/B ratio is ~3.5 (Current Price / Book Value), which is expensive compared to peers. PEG ratio of -1.54 indicates weak or negative growth prospects relative to valuation. Intrinsic value appears lower than CMP, offering limited margin of safety.
🏢 Business Model & Competitive Advantage: JSWSTEEL operates in the steel manufacturing sector, benefiting from scale, integrated operations, and strong domestic demand. Competitive strengths include brand presence, diversified product portfolio, and global reach. However, high debt, modest return ratios, and cyclical earnings reduce its competitive edge compared to leaner peers.
🎯 Entry Zone Recommendation: Current price of 1,192 ₹ is near its 52-week high of 1,245 ₹, limiting immediate upside. A more attractive entry zone would be around 1,050–1,100 ₹ (closer to DMA 200 at 1,097 ₹), offering better risk-reward. Long-term investors should accumulate only on dips, given stretched valuations and cyclical risks.
Positive
- Strong brand presence and scale in the steel industry.
- DII holdings increased by 0.19%, showing domestic institutional support.
- EPS of 26.5 ₹ provides consistent earnings visibility.
- Technical support around DMA 200 (1,097 ₹).
Limitation
- High P/E of 40.5 compared to industry average (20.7).
- Weak ROCE (10.2%) and ROE (8.89%) indicate modest efficiency.
- Quarterly PAT decline from 1,493 Cr. to 979 Cr. (-28.4%).
- Debt-to-equity ratio of 0.84 adds financial risk.
Company Negative News
- Sharp decline in quarterly profits raises sustainability concerns.
- FII holdings decreased by 0.18%, reflecting reduced foreign investor confidence.
Company Positive News
- DII inflows suggest domestic support despite weak fundamentals.
- Strong demand outlook from infrastructure and construction sectors.
Industry
- Steel industry P/E at 20.7 reflects moderate valuations.
- Sector growth driven by infrastructure, housing, and automotive demand.
- Government spending on construction supports long-term expansion.
Conclusion
⚖️ JSWSTEEL is fundamentally moderate with strong industry positioning but faces challenges from high debt, declining profits, and stretched valuations. Current price offers limited upside, and accumulation is advisable only near 1,050–1,100 ₹ for better margin of safety. Long-term holding may yield moderate returns, supported by infrastructure demand, but investors should remain cautious due to cyclical risks and valuation pressures.
Would you like me to also compare JSWSTEEL’s valuation multiples against Tata Steel and SAIL so you can see how it stacks up against peers?