Sajjan Jindal-led JSW Steel has emerged as the most valuable company globally with its market capitalisation touching $30.5 billion on Tuesday.
It was ranked higher than the global steel companies such as US-based Nucor Corp and ArcelorMittal whose market-cap was at $29.4 billion and $26.9 billion.
Nippon Steel Corp and Tata Steel m-cap was at $24.5 billion and $22.9 billion as on Tuesday.
Week demand
While the global steel companies were ravaged by weak demand and trade tariffs, Indian steel companies are on a better footing in terms of demand on the back of robust government spending and buoyant consumer demand.
Though relentless imports have capped domestic steel companies ability to mark up prices, they benefited from fall in raw material cost and other operational expenses.
Domestic steel companies led by Tata Steel and JSW Steel have also announced major expansion to capture the expected growth in local demand. This has led to investors bet big on steel company stocks.
Shares of JSW Steel have risen 18 per cent so far this year and close at to ₹1,071 on Tuesday. This has contributed to this surge in the company’s market capitalisation. The stock is also among the best performers on the Nifty 50 index in this year.
Vishnu Kant Upadhyay, AVP – Research & Advisory, Master Capital Services said JSW Steel has an ambitious capacity expansion plans to reach 43 mt capacity by 2027 and 51 mt by 2030 and enhancing operational efficiency by securing essential raw materials such as iron ore and coking coal.
While heavy debt always involves a certain risk — particularly if market conditions shift or if the company’s growth does not meet expectation, he said investors seem reassured by JSW Steel’s prudent financial management even as they monitor economic conditions and the company’s performance closely.
Prashanth KP Kota, CFA, Lead Analyst – Basic Materials sector, Choice Broking said with an aggressive capital structure JSW Steel has not only enabled continuous capacity growth but also maintained healthy RoEs and focused on conversion cost efficiency, besides nimble sales strategy.
With the US unleashing a tariff war, there is always a risk of India becoming a dumping ground for excess steel produced globally. However, it will be nullified partially if the 12 per cent import duty recommended by DGTR (Directorate General of Trade Remedies) is implemented, he added.