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On Monday, BofA Securities adjusted its outlook on JSW Steel Ltd (NSE:JSTL:IN), reducing the price target from INR 1,090 to INR 1,030, while upholding a Buy rating on the stock. The revision follows the company's third-quarter fiscal year 2025 report, which revealed a consolidated EBITDA of INR 56 billion, marking a 3% quarter-over-quarter increase and outperforming BofA's estimates by 12% and consensus forecasts by 6%.
The standalone EBITDA for the quarter stood at INR 44 billion, aligning with expectations. However, the consolidated figures exceeded forecasts due to stronger-than-anticipated performance from Indian subsidiaries, including Bhushan Power and Steel Limited (BPSL) and JSW Coated Products Limited.
Despite a decline in standalone EBITDA per ton to INR 7,866 from INR 8,757 in the previous quarter, attributed to lower realizations and increased iron ore costs, this was partly mitigated by decreased coking coal expenses. Saleable steel sales volumes rose by 8% year-over-year and 5% sequentially.
The company's net debt saw a quarter-over-quarter reduction of INR 19 billion, settling at INR 809 billion. Subsidiary and joint venture performances also drew attention, with BPSL's EBITDA reaching INR 5.4 billion, surpassing BofA's expectations by 15%. JSW Coated's EBITDA was reported at INR 5.0 billion, significantly higher than the anticipated INR 2.0 billion, although international operations recorded an EBITDA loss of US$16 million against a forecasted US$13 million loss.
In light of these results, BofA Securities has revised its EBITDA projections for fiscal years 2025 to 2027 downward by 2-11%. Despite the price target reduction, BofA Securities reaffirms its Buy rating for JSW Steel, expressing confidence in the company's converter business model and its potential to benefit from a falling iron ore price environment.
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