Recommendation from Metals & Mining Sector

This section gives a recommendation of a stock having stock price below Rs 150 with sound fundamentals and expected to give handsome returns over a one-year time horizon[EasyDNNnews:PaidContentStart]

Jayaswal Neco Industries Ltd : LEVERAGE STRATEGIC INVESTMENTS FOR SUCCESS

HERE IS WHY
✓  Robust Performance Amid Capacity Upgrades
✓  Strong Position in Automotive & Construction Sectors
✓  Focus on High-Value, Special Steel Products

I ndia’s steel industry has shown robust growth in recent years, driven by an increase in demand from infrastructure, construction, and automotive sectors. The nation is expected to see steel demand grow by 8 per cent in 2024–25, underpinned by increased investments in infrastructure, urbanisation, and industrial growth. With the government allocating significant funds towards infrastructure development, including road, rail, and urban projects, the demand for steel, particularly alloy steel, remains strong.

Jayaswal Neco Industries Limited (JNIL), founded in 1972, is a fully integrated manufacturer of alloy steel, sponge iron, pellet, and pig iron, catering primarily to the automotive, construction, Defence, and industrial sectors. The company operates a robust steel plant division with a capacity of 1 million tonnes per annum (MnTPA), supported by its two captive iron ore mines and power generation facilities.

Jayaswal Neco is well-positioned to capitalise on India’s burgeoning infrastructure sector and the continued growth of the automotive industry. The company’s competitive edge lies in its integrated operations, including captive mining, which ensures a steady supply of raw materials, thereby reducing input costs. The ongoing modernisation of its Blast Furnace (BF) and ramp-up in capacity utilisation will enhance productivity, resulting in higher margins and profitability.

The company has also secured long-term contracts with leading automotive OEMs, which provides stability and visibility in its revenue streams. Furthermore, JNIL's focus on high-value alloy steel products, including precision castings, positions it well in the fastgrowing automotive and defence sectors.

In the recent quarters, JNIL’s production and despatch volumes have increased significantly due to the ramp-up of its BF post-upgrade. The company’s expansion into new product lines, including higher-grade steel for defence and infrastructure, further strengthens its growth prospects. JNIL’s upcoming plans to refinance high-cost debt at more favourable terms will also boost its financial flexibility, supporting future growth initiatives.

Jayaswal Neco Industries has demonstrated strong financial performance in Q2 FY26, the company reported a 44.8 per cent increase in net sales, reflecting its increased production capacity and strong demand across key sectors. The EBITDA margin improved from 15.7 per cent in FY25 to 19.1 per cent in Q1 FY26, supported by higher capacity utilisation and cost efficiencies from its captive mining operations. PAT saw a remarkable turnaround, growing by 407.4 per cent YoY, reaching ₹105 crore in Q2 FY26.

The company has also made significant progress in debt reduction, with net debt decreasing by 16 per cent YoY. With a strong Order Book and a solid liquidity position, JNIL is poised for sustained growth.

JNIL’s stock currently trades at an attractive P/E of 18x, below the industry average of 21x, and offers an EV/ EBITDA ratio of 7.06x, significantly lower than the industry’s 11.37x, suggesting potential for multiple expansion. The company’s strong operational improvements, ongoing debt reduction, and strategic positioning in high-value steel products make it an attractive investment opportunity.

Given its strong fundamentals, competitive positioning, and the favourable growth outlook for India’s steel sector, we recommend a Buy on Jayaswal Neco Industries as a low-priced emerging leader in the alloy steel sector.

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