Jindal Stainless price recovery and capacity ramp support FY27 earnings outlook

Investment View and Q1 FY27 Highlights

Motilal Oswal Financial Services retained its Buy rating on Jindal Stainless in its August 4, 2026 result update. The broker viewed the Q1 FY27 operating performance as strong, with improved net sales realisation offsetting muted sales volumes and higher costs. It expects earnings to remain strong through FY27E and FY28E, supported by incremental output from newly added capacity and healthy stainless-steel prices, although near-term cost inflation remains a challenge.

Jindal Stainless reported Q1 FY27 revenue of Rs 113 billion, up 11 per cent year on year and flat sequentially, exceeding Motilal Oswal's estimate of Rs 103 billion. The outperformance was driven by a 19 per cent year-on-year and 10 per cent quarter-on-quarter increase in average selling price to Rs 1,94,188 per tonne, reflecting stainless-steel price recovery.

Sales volume was in line with the broker's estimate but declined because of limited propane and LPG availability amid the Middle East crisis. EBITDA was above estimate, while EBITDA per tonne rose year on year as better realisations partly offset cost escalation. Adjusted profit after tax increased 8 per cent year on year but declined 14 per cent sequentially.

Export share increased to 11 per cent from 7 per cent in Q4 FY26 and 9 per cent in Q1 FY26, aided by opportunities in South Korea, Japan and Brazil and a stronger presence in Europe and the US. Consolidated net debt remained about Rs 30 billion, with net debt to equity at 0.14 times at the end of Q1 FY27.

Management Commentary and Operating Conditions

Management retained its FY27 guidance for 8-10 per cent volume growth and EBITDA per tonne of Rs 18,000-20,000 in the first half of FY27. Production had returned to pre-crisis levels after industrial-gas shortages and logistics disruptions, and management expects volumes to recover gradually.

Management also noted moderating gas prices and lower dependence on imported LPG and propane after commissioning piped natural gas at Jajpur. A similar project is under way at Hisar. The Q1 FY27 product mix comprised 35 per cent 200 series, 47 per cent 300 series and 18 per cent 400 series. Higher-value products were prioritised to protect profitability during production constraints.

• Rathi Steel returned to about 70 per cent utilisation.
• Chromeni operated at about 80-85 per cent utilisation and benefited from uninterrupted piped natural gas availability.

Capacity Expansion and Growth Drivers

Capacity additions are an important growth driver. The newly commissioned 1.2 million tonnes per annum stainless-steel melt shop in Indonesia is ramping up, and management expects 70-80 per cent utilisation in its first operating year.

Downstream projects at Jajpur, Hisar and Kharagpur remain on schedule. The 1.1 million tonnes per annum hot-rolling line is expected in Q3 FY27, while cold-rolling capacity is targeted to rise to 2.67 million tonnes per annum by FY28. These additions support the company's target of 3.5 million tonnes of sales by FY29.

FY27 capex of about Rs 28 billion is focused on downstream value-added products. Jajpur's 600 Nm³ per hour green-hydrogen plant is expected to be commissioned in August 2026.

Earnings Outlook and Valuation

Motilal Oswal expects domestic stainless-steel demand to exceed 7 million tonnes by FY31 and considers Jindal Stainless well positioned as the dominant player, with value-added products supporting margins. The broker forecasts a revenue CAGR of about 15 per cent and an EBITDA CAGR of 12 per cent over FY26-28E, with EBITDA per tonne of Rs 21,000-22,000.

The broker raised its FY27E revenue, EBITDA and adjusted PAT estimates by 5.3 per cent, 3.8 per cent and 4.5 per cent, respectively, while largely retaining its FY28E estimates.

The Rs 910 target price is based on 11 times FY28E EV/EBITDA, implying a target enterprise value of Rs 761 billion and an equity value of Rs 749 billion after accounting for Rs 12 billion of net debt. At the report CMP, the stock traded at 8.9 times FY28E EV/EBITDA.