After early confusion in the market, JSW Steel clarified that the deal values the asset at about ₹53,000 crore. As part of the structure, JSW Steel will receive about ₹24,000 crore for its asset transfer, while approximately ₹5,000 crore of debt from Bhushan Power & Steel gets removed from its books.
A second payment of ₹7,000 crore from JFE will further improve the company’s finances. Even after giving up 50% ownership in the new entity, JSW Steel will continue to hold a stake worth roughly ₹16,000 crore.
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The biggest positive impact comes from leverage reduction. JSW Steel’s net debt could fall by over 45%, which would improve its net debt to EBITDA ratio from around 3 times to close to 1.7.
The restructuring leads to an 11% drop in consolidated EBITDA and a capacity reduction of as much as 14–15%, but the long-term financial gain outweighs the short-term cuts. The deal will give JSW Steel the room to move faster on pending expansion plans. “This would also give JSW Steel an opportunity to expedite their other projects like the Dolvi and Odisha projects,” he said.
Brokerage views have been broadly supportive. Nuvama expects the transaction to improve JSW Steel’s fair value by ₹37 per share. Motilal Oswal agrees that the deal is aligned with the company’s deleveraging strategy. CLSA remains cautious but still sees value creation in the ₹30–?70 per share range due to the sharp improvement in the balance sheet, while Jefferies has kept its ‘buy’ rating, calling the earnings impact neutral but the financial structure strong.
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Singh said there are still concerns about the joint venture’s total debt of about ₹21,000 crore. Of that, nearly ₹12,000 crore sits at the operating company level, which he believes can be managed under current steel prices. However, he is slightly cautious about the ₹9,000 crore at the holding company level, which depends on post-tax profits and dividend flows. Any future expansion from the current 5 million tonne of capacity to 10 million tonne would require additional capital from both JSW Steel and JFE.
From JFE’s point of view, Singh said the deal shows confidence in India, one of the few steel markets still growing at 7 to 8% a year, while Japan faces shrinking demand.
ICICI Securities continues to maintain its hold rating on JSW Steel with a price target of ₹1,110 per share. Singh said the agreement could be 3–4% positive for their valuation once the transaction is fully reflected in forecasts.
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