JSW Steel shares: This brokerage expects stock to hit Rs 1,150 mark, breach record high

Shares of JSW Steel are set to hit the Rs 1,150 mark in a year, according to brokerage Motilal Oswal. The fresh price target by the brokerage is over 8% higher than the 52-week high of Rs 1063.65 reached on October 4 last year. 
The brokerage is bullish on JSW Steel shares as it expects the firm to generate strong cash flow, which can be utilized to fund the expansion plan and for deleveraging. 

In the current session, shares of JSW Steel were trading on a flat note at Rs 981.90. The price target of Rs 1,150 amounts to an upside of 18% to the previous close. 

In early deals, a total of 4,023 shares of the firm changed hands amounting to a turnover of Rs 39.45 lakh on BSE. Market cap of the firm stood at Rs 2.40 lakh crore. 

JSW Steel stock has clocked 19.80% returns in a year. This year, the stock is up 8.55%. In terms of technicals, the relative strength index (RSI) of the stock stands at 62, signaling it's trading neither in the overbought nor in the oversold zone. The stock is trading higher than the 5 day, 10 day, 20 day, 50 day, 100 day, 150 day and 200 day moving averages.

The brokerage expects the firm to clock a 8-10% YoY volume growth for FY26-27E from expansion despite a fall in short-term metal price. 

"With stable input costs and strong realizations, EBITDA is expected to grow at a ~15% CAGR by FY27E, ensuring strong cash flows for expansion and deleveraging. The company aims to raise iron ore production to 15mtpa in Karnataka and 30mtpa in Odisha by FY26," said Motilal Oswal. 

The brokerage expects JSTL to generate strong cash flow, which can be utilized to fund the expansion plan and for deleveraging. 

"At CMP, JSTL trades at 6.7x FY27E EV/EBITDA and we maintain our FY26/FY27 estimates. We reiterate our BUY rating on the stock with a TP of Rs 1,150 (premised on 7.5x EV/EBITDA on FY27 estimate," said Motilal Oswal.

In Q3 of this fiscal, the steel major JSW reported a 71% year-on-year fall in its consolidated net profit at Rs 719 crore in the third quarter on an exceptional charge of Rs 103 crore.  Revenue from operations in Q3 fell 1% year-on-year to Rs 41,378 crore compared to Rs 41,940 crore in the corresponding period of last year.