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JSW Steel undergoes major B/S deleveraging selling 50% stake in BPSL to JFE Steel

ICICIdirect Research 05 Dec 2025 DISCLAIMER

JSW Steel and its longstanding partner, JFE Steel Corporation, have formed a joint venture to jointly operate Bhushan Power and Steel Ltd (BPSL), with JFE investing ₹15,750 crore for a 50% stake, paid in two equal instalments.
This transaction pegs BPSL’s enterprise value at ~₹53,000 crore, comprising an equity value of ~₹31,500 crore and total debt of ~₹21,500 crore- (including ~₹ 4,900 crore as existing debt and rest fresh raise).
At this valuation, the deal works out to an FY27E EV/EBITDA multiple of ~12x, which is higher than our assign ~9x multiple to JSW Steel on consolidated basis.
The move is strategically positive for JSW Steel. With expected inflows of ~₹37,250 crore, the company will be able to reduce consolidated net debt by ~50% by FY27, significantly improving its Net Debt/EBITDA ratio from the current ~3x to ~1x. The decline in EBITDA with BPSL moving out is pegged at ~11%.
Importantly, the joint venture also plans to scale up BPSL’s capacity from the current 4.5 MTPA to 10 MTPA by 2030, with a strong push toward value-added steel products, supported by JFE’s advanced technology.
The transaction is positive in nature as it provides b/s bandwidth to both the entities to walk onto their own aggressive growth paths. With net cash inflows into JSW Steel & valuations at which it is executed, it is accretive to our target price by ₹ 60/share.
However, the elevated valuation limit upside from current levels. We maintain HOLD rating on JSW Steel with SOTP based revised target price of ₹1,280.

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