JSW Steel (JSWSTEEL)

FairStock Score: 50/100 — MIXED

Score breakdown: P/E: 0/3 · ROCE: 0/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Integrated steel producer with 5-year revenue CAGR of 16.16%, showing compound capacity and volume expansion.
• Promoter holding at 45.31% aligns management with minority shareholders.
• Piotroski F-Score of 8/9 and positive FCF of ₹3,887 Cr signal improving financial health.
• Latest quarter net profit of ₹2,410 Cr on sales of ₹45,991 Cr supports near-term earnings recovery.

Concerns

• P/E of 39.57, P/B of 3.71, and PEG of 10.35 indicate an expensive valuation for a cyclical commodity business.
• ROE of 9.36% and ROCE of 8.11% are modest, while debt/equity of 1.22 adds financial risk in a capital-intensive industry.
• Graham Number of ₹482.18 and DCF intrinsic value of ₹850.93 are far below the current price of ₹1,257, leaving no margin of safety.
• Dividend yield of just 0.22% is negligible, and latest sales growth of 5.19% is muted.

AI Analysis

As a value investor, I want to understand the business first. JSW Steel is an integrated steel producer in India, a capital-hungry commodity industry. There is no brand moat; the only advantage is scale, location, and cost efficiency. Promoters hold 45.31%, so interests are aligned. The 5-year revenue CAGR of 16.16% shows the company has grown impressively, but latest sales growth of 5.19% reminds me that momentum is slowing. The 134.48% profit growth is welcome, yet it comes after a cyclical trough, and a trailing P/E of 39.57 suggests the market is treating a cyclical recovery as secular growth. The financial health is mixed. Debt/equity of 1.22 is acceptable only because steel is asset-heavy. Current ratio 1.32 and free cash flow of ₹3,887 Cr are reassuring. A Piotroski score of 8/9 tells me earnings quality is improving. But return on equity of 9.36% and ROCE of 8.11% are modest; in a cyclical commodity business I like to see higher returns or a lower price. Graham would now check valuation. Book value is ₹339.13, yet price is ₹1,257. The Graham Number is ₹482.18, and an estimated DCF value is ₹850.93. Buying at today's price gives me a negative margin of safety. The dividend yield is 0.22%, so I am getting no compensation for waiting. This is a well-run cyclical, not a compounder. I would wait for either a much lower price or proof that debt keeps falling and ROCE crosses the cost of capital. Patience is the investor's greatest asset.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer