JSW Steel’s agreement with Japan’s JFE Steel to form a 50:50 joint venture for Bhushan Power & Steel Ltd (BPSL), valued at ₹53,100 crore, has been received positively by analysts as the deal valuation surpassed earlier estimates. The development has led to upward revisions in target prices and is expected to support JSW Steel’s long-term balance sheet strength.
Deal Structure and Valuation
- JSW Steel will sell a 50% stake in BPSL to JFE Steel for ₹15,750 crore, payable in two tranches.
- The enterprise value of the transaction stands at ₹53,100 crore, comprising ₹31,500 crore in equity and ₹21,000 crore in debt.
- As part of the process, BPSL will be transferred to JSW Sambalpur via a slump sale valued at ₹24,480 crore.
Financial and Strategic Impact
Analysts believe the monetisation unlocks significant value and strengthens JSW Steel’s balance sheet:
- Nuvama Research expects a ₹37 per share fair-value accretion, though maintains a ‘Reduce’ rating with a target price of ₹1,050, citing soft steel prices.
- Emkay Global highlighted that the deal value far exceeded its prior estimate of ₹40,500 crore, reiterating an ‘Add’ rating with a target of ₹1,200.
- Motilal Oswal Financial Services (MOFSL) estimates that JSW Steel will receive ₹32,000 crore in cash and reduce consolidated debt by ₹35,000 crore, maintaining a positive outlook driven by capacity expansion and steel price recovery.
Operational Performance of BPSL
Since acquisition via insolvency proceedings in 2021 at ₹19,350 crore, BPSL has been turned around operationally:
| Indicator | FY25 Result |
| Revenue | ₹21,440 crore |
| EBITDA | ₹2,210 crore |
| Net Profit | ₹260 crore |
| Installed Capacity | 4.5 MTPA (expanded from 2.75 MTPA) |
| Net Debt | ₹5,000 crore |
Analyst Outlook
Brokerages believe the JV positions JSW Steel for the next phase of capacity-led growth as India’s steel demand rises 8–9% annually. EBITDA margins are expected to expand to 18–19% in FY26 and FY27, supported by domestic price recovery and lower input costs.
Summary
The ₹53,100 crore joint venture between JSW Steel and JFE Steel for BPSL is considered value-accretive, exceeding analyst valuation expectations and materially strengthening JSW Steel’s balance sheet. With significant deleveraging, strong demand outlook, and operational momentum, analysts maintain a mixed but broadly positive stance, projecting improved profitability and growth over the next two years.
Disclaimer:
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