Dividend of Rs 3.40/Sh: Big Cap Steel Company Shares Fall Due To Unfavorable Brokerage Reports; Do You Own?

The shares of the large-cap steel business JSW Steel fell more than 1% to Rs 817.40 a share as of 12:05 pm on the National Stock Exchange (NSE), marking the second day in a row that trading was suspended. This drop comes after CLSA downgraded steel firms recently, citing concern despite a metals surge that seems to have left the steel industry underwhelmed.

JSW Steel’s share price reached a 52-week high of Rs 895.60 and a 52-week low of Rs 649.75. The company’s current market value on the BSE is 1,99,879.18 crore, which is strong despite its recent troubles.

JSW Steel Ltd. has been a steady participant in the market since August 1, 2002, when it first announced 25 dividends. An equity dividend of Rs 3.40 per share has been announced for the last twelve months, which, at the current share price of Rs 816.0500, offers a dividend yield of 0.42%. On January 4, 2017, JSW Steel Ltd. divided the face value of its shares once, from Rs. 10 to Rs. 1.

The steel industry has been impacted by CLSA’s recent downgrading, as Tata Steel and JSW Steel have both been downgraded from “outperform” to “sell” and “underperform,” respectively. JSW Steel’s lowered target price per share is Rs 730, down from Rs 810 before.

Despite spread compression not being reflected in consensus projections, CLSA’s cautious approach is based on the assumption of a shift in the profit pool towards miners, reduced spread expectations, and inflated stock valuations. The brokerage projects smaller spreads and a move towards raw materials but cautions about the effects of India’s explosive increase in its blast furnace-based steel production.

According to a report from brokerage company Elara Capital, JSW Steel has recorded a mixed performance despite the cautious outlook. Net sales increased by around 7% year over year, but decreased by about 6% quarter over quarter to about Rs 41,300 crore. EBITDA decreased by around 9% QoQ to roughly Rs 7,200 crore but rising by roughly 58% YoY. Achieved PAT increased by around 393% YoY and 3% QoQ to over Rs 2,400 crore.

Elara Capital notes that continuous expansion capital expenditures have been completed, which may raise the capacity of steelmaking to 37 million metric tons by FY25. By FY31, JSW Steel wants to be able to produce 50 million tons. Elara Capital maintains a “accumulate” rating despite the market’s caution, rolling over to December 2025 with a higher target price of Rs 909 per share from Rs 867 per share based on 7x December 2025 EV/EBITDA and modifying EBITDA forecasts for FY24 and FY25.

Another report from brokerage Centrum shows that JSW Steel’s EBITDA, which was down 9% on a quarterly basis, was higher than predicted at Rs 7,185 crore. Due to decreased export demand and increased imports in the retail sector, sales volume saw a 3.8% QoQ dip; nevertheless, average realization increased by 2.8% during the same period. According to the study, there may be a decrease in realization in Q4 FY24, somewhat offset by increases in export sales. Centrum is still rated “ADD” and has set a target price of Rs 868 per share, or 6.5 times the average EV/EBITDA for the fiscal years FY25 and FY26.

By the end of Q4FY24, the massive steel manufacturer plans to complete a 1.5 mtpa and 5 mtpa capacity increase at BPSL and Vijaynagar. Notwithstanding these intentions for growth, the steel industry is confronted with challenges, as increased steel output may put pressure on the availability of coking coal and iron ore, according to CLSA. China’s avoidance of Australian coal may be countered by India’s contribution to the balance of coking coal and growing demand.

The market has seen a respectable voyage for JSW Steel’s shares, which have increased by little more than 21% over the last year. But the stock has dropped by just over 7% so far this year, indicating a difficult time ahead for the massive steel manufacturer. The stock has grown more than 101% over the last three years, demonstrating resiliency.

The downgrading by CLSA is a warning to investors and industry experts, who are keenly watching events in the steel sector. The next months will show how JSW Steel and its competitors respond to the shifting dynamics of the market and if the cautionary note issued by CLSA turns out to be a one-time event or a long-term pattern.