JSW Steel Upgraded to Buy on Strong Financials and Bullish Technicals

Technical Upgrades Signal Renewed Momentum

The primary catalyst for the rating upgrade stems from a marked improvement in JSW Steel’s technical grade, which shifted from mildly bullish to bullish. Key technical indicators reveal a nuanced but optimistic picture. On the weekly chart, the Moving Average Convergence Divergence (MACD) remains mildly bearish, but the monthly MACD has turned bullish, signalling strengthening momentum over the longer term. Meanwhile, the Relative Strength Index (RSI) shows no immediate overbought or oversold signals on both weekly and monthly timeframes, suggesting room for further price appreciation.

Bollinger Bands reinforce this positive outlook, with both weekly and monthly readings firmly bullish, indicating sustained upward price volatility within a healthy range. Daily moving averages also support the bullish stance, reflecting consistent buying interest. The Know Sure Thing (KST) indicator presents a mixed view—mildly bearish weekly but bullish monthly—while Dow Theory assessments show mild bullishness weekly, tempered by mild bearishness monthly. On-balance volume (OBV) trends mildly bullish weekly, though neutral monthly, suggesting institutional accumulation in the near term.

These technical signals collectively justify the upgrade, highlighting a transition to stronger price momentum and improved market sentiment.

Financial Trend: Strong Quarterly Performance and Growth Trajectory

JSW Steel’s financial performance in Q2 FY25-26 has been a key driver behind the upgrade. The company reported net sales of ₹45,152 crore, marking the highest quarterly sales figure to date. Profit before tax excluding other income (PBT less OI) surged by 29.2% compared to the previous four-quarter average, reaching ₹2,060 crore. Net profit after tax (PAT) also rose impressively by 26.8% to ₹1,623 crore over the same period.

These results underscore a healthy operational momentum, supported by a robust demand environment and efficient cost management. Over the long term, JSW Steel has demonstrated consistent growth, with net sales expanding at an annualised rate of 21.10% and operating profit growing at 19.64%. Return on capital employed (ROCE) stands at a respectable 10.1%, reflecting effective utilisation of capital resources.

Institutional investors hold a significant 36.93% stake in the company, signalling confidence from sophisticated market participants who typically conduct rigorous fundamental analysis. This institutional backing adds credibility to the company’s growth prospects and financial stability.

Valuation: Attractive Relative to Peers and Historical Levels

JSW Steel’s valuation metrics further support the upgrade. The stock currently trades at a discount relative to its peers’ average historical valuations, with an enterprise value to capital employed ratio of 2.3, indicating fair pricing given its growth profile. The price-to-earnings growth (PEG) ratio stands at 2.6, which, while slightly elevated, is justified by the company’s strong earnings growth of 18.5% over the past year.

With a market capitalisation of ₹2,90,165 crore, JSW Steel is the largest company in the ferrous metals sector, accounting for nearly 25% of the sector’s total market cap. Its annual sales of ₹1,74,496 crore represent 21.74% of the industry’s revenue, underscoring its dominant market position. This scale provides competitive advantages in procurement, production, and distribution, which are reflected in its valuation premium relative to smaller peers.

Quality Assessment: Robust Fundamentals and Market Leadership

The company’s quality grade remains strong, supported by its leadership in the steel industry and consistent financial discipline. JSW Steel’s operational efficiency, demonstrated by steady ROCE and improving profit margins, highlights its ability to generate sustainable returns. The company’s strategic initiatives to enhance capacity and diversify product offerings have positioned it well to capitalise on cyclical upswings in steel demand.

JSW Steel’s stock has delivered market-beating returns, with a 30.20% gain over the past year compared to the BSE500 index’s 7.21%. Over longer horizons, the stock’s performance is even more impressive, with five-year returns of 193.01% and a ten-year return exceeding 1,055%, vastly outperforming the Sensex and broader market indices. This track record of superior returns reflects the company’s strong fundamentals and investor confidence.

Comparative Returns Highlight Market Outperformance

JSW Steel’s recent price action reinforces its upgraded status. The stock closed at ₹1,186.55 on 08 January 2026, up 0.83% from the previous close of ₹1,176.75. It traded within a range of ₹1,171.30 to ₹1,192.10 during the day, remaining close to its 52-week high of ₹1,223.75. Over the past week and month, the stock has outperformed the Sensex, gaining 1.85% and 1.65% respectively, while the benchmark index declined by 0.30% and 0.88% over the same periods.

This relative strength is a positive technical confirmation of the company’s upgraded outlook and suggests continued investor interest.

Outlook and Investment Implications

The upgrade to a Buy rating by MarketsMOJO reflects a comprehensive assessment of JSW Steel’s improved technical momentum, solid financial results, attractive valuation, and strong quality metrics. The company’s dominant market position and consistent growth trajectory provide a compelling investment case amid a recovering global steel demand environment.

Investors should note that while the stock’s PEG ratio of 2.6 suggests a premium valuation relative to earnings growth, this is balanced by the company’s robust fundamentals and institutional support. The technical indicators point to further upside potential, supported by positive volume trends and moving average alignments.

Given these factors, JSW Steel is well-positioned to deliver sustained returns, making it a favourable addition to portfolios seeking exposure to the ferrous metals sector.

Summary of Ratings and Scores

As of 07 January 2026, JSW Steel’s Mojo Score stands at 75.0, with a Mojo Grade upgraded to Buy from Hold. The Market Cap Grade remains at 1, reflecting its large-cap status. The technical grade improvement was the primary driver of the upgrade, supported by strong financial trends and fair valuation metrics.

Overall, the stock’s combination of market leadership, financial strength, and positive technical signals justifies the upgraded investment rating, signalling confidence in its near- and medium-term prospects.

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