Jayaswal Neco Industries
CMP: ₹70; MCAP: ₹6,800 Cr; Debt: ₹1,800 Cr; EV: ₹9,100 Cr
About the Company
Jayaswal Neco Industries Ltd. (JNIL), incorporated in 1972, is the flagship company of the Neco Group of Industries based in Nagpur, promoted by Shri Basant Lall Shaw, Arvind Jayaswal, and Ramesh Jayaswal. Starting with foundry units in Nagpur, the company expanded in 1995 by setting up a pig iron plant with captive power at Siltara, Raipur, Chhattisgarh, marking its backwards integration.
Today, JNIL is a fully integrated manufacturer of alloy steel wire rods, bars, bright bars, as well as steel billets, pig iron, sponge iron, pellets, and iron & steel castings. Its products serve diverse sectors, including automotive, automotive components, engineering, power, railways, and others. The company is the largest independent Special Bar Quality (SBQ) alloy steel manufacturer in India with a capacity of 1 MTPA, which is completely backed by its captive Iron Ore.
Current Capacity Information:
Historical Challenges and Financial Turnaround:
JNIL lost its 3 captive coal mines in 2014 during the coal deallocation saga, which eventually led to the seizure of one of its plants by ED in 2017-18. Meanwhile, due to law-and-order issues at the allocated iron ore mines in Chhattisgarh, the iron ore mines could not commence operations in the expected timeframe. The company came under financial stress as it had planned a large debt-funded expansion in expectation of captive coal and ore. Prolonged global headwinds in the steel sector from 2015 further worsened its ability to service the debt on time. The company faced potential insolvency proceedings, and in 2018, the lead banker, SBI- filed an application with NCLT to initiate the CIRP due to defaults. But it successfully avoided bankruptcy through debt restructuring, wherein the debt was assigned by lenders to ACRE ARC. After haircuts and partial equity conversion (26% equity in JNIL), the ACRE ARC debt was refinanced with a consortium of NBFCs by issuing NCDs worth ₹3,200 crores at a 17.5% interest rate in Dec’23.
Investment Rationale
Exit of ACRE- Ideation of the stock: In July 2025, ACRE sold its entire ~26% stake in JNIL through open market transactions, fully exiting the company. This removal of a major selling overhang is expected to improve market sentiment. It is interesting that despite such a big equity changing hands in a single month, details of only ~3% buyers got disclosed as bulk/block out of the ~26% equity stake sold by ACRE ARC.
Restructuring of the debt- the inflection point: At the time of refinancing, the NCD holders allowed early redemption within 24 months of issuance. In August’25, JNIL exercised this option to refinance the remaining ₹2,700 crore high- interest debt. By H1FY26, it further prepaid ₹400 crores, bringing down the total debt to ₹2,300 crores. As per the recent credit rating upgrade, Tata Capital sanctioned ₹2,300 crores of debt at a rate of 12.5% p.a - a substantial reduction from the existing 17.5% p.a. In December’25, this refinancing activity was completed, and the current debt is ₹1,800 crores NCD and ₹500 crores working capital debt. Post this stellar deleveraging and refinancing exercise, interest cost is expected to come down from ₹400 crores in FY26 to ₹288 crores in FY27.
Iron Ore- Structural Advantage: The company has two captive iron ore mines in Chhattisgarh, allotted under the old regime around the year 2000, with a combined current EC capacity of 4 MTPA and total extractable reserves of 73 MT. However, these mines were earlier impacted by LWE and were difficult to operate. The average FE grade for these mines is ~60% which is considered high grade. Additionally, the mining leases for both mines have been extended until 2050, providing key raw material security for its integrated steel plant which is located at <300 km lead distance. As these mines are allocated under the old regime, they are amongst the lowest cost iron ore mines in India.
Enhancing capacity from 4 MnTPA to 7 MnTPA as per management ambitions- Earnings Delta:
• FY25–26: 4.0 MnTPA
• FY26–27: 5.8 MnTPA
• FY27–28: 7.0 MnTPA
The Chhotedongar mine, which has ~68 MT of proven reserves, began meaningful extraction only in FY23 with production of ~1.1 MTPA. The company successfully ramped up production to ~1.6 MTPA in FY24 and to ~2 MTPA last year. FY26 is expected to be the first year of its operations at peak rated approval of 2.95 MTPA (48% increase YoY). Metabodeli mine has been operating at the peak rated approval of 1 MTPA for the last couple of years.
Over the last year, JNIL has initiated the process to seek approval for further expansion at its Chhotedongar mine from 2.95 MTPA to 6 MTPA. Currently, the application is at MOEFCC and barring any unforeseen issues, we expect this clearance over the next few months. This will provide a significant growth in its annual mining capacity by ~75%. Given that this is a brownfield expansion and through an opencast route, it is expected to be margin accretive.
Speciality Alloy Steel- niche positioning: The company is engaged in the manufacturing of SBQ (Special Bar Quality) steel, which refers to a specific class of steel bars engineered to meet more demanding applications than standard merchant bar quality steels, hence commanding higher realisations. JNIL is among the few players whose products are accepted by Auto OEMs. In India, there are very few SBQ manufacturers that are fully backed by captive iron ore mines. The combination of higher-grade speciality alloy steel- SBQ and captive ores enables JNIL to achieve higher and more sustainable margins compared to other peers in the alloy steel industry.
Debottlenecking: JNIL completed a ~₹400 crores capex program in FY25 for blast furnace maintenance, upgradation and expansion to 0.75 MnTPA. Also, the rolling mill capacity increased to 1 MTPA. The full benefit of this will be visible from FY26. As of Q2 FY26, the utilisation levels on expanded capacity are ~70% for the rolled products, thereby implying further scope for volume growth from higher margin rolled products over the next 2 years. Additionally, the company is planning to do further debottlenecking of Blast Furnace & Steel Making Facilities to 1 MnTPA from 0.75 MnTPA with the capex of 930 crore, which is expected to come online 2 years from now.
Future capex: Following refinancing, over the longer term, JNIL plans to double its entire steel-making capacity, including other backward integration plants such as the sinter plant, DRI plant, coke oven, pellet plant, and steel melting shop. Leveraging its fully backwards-integrated supply chain, and with environmental clearance already secured in October 2023, the company has earmarked a total capex of ~₹8,500 crore. They have also initiated the process to setup additional pellet plant of 1.5 MnTPA, which is expected to start contributing in numbers from FY28.
Valuations:
JNIL’s closest peer is Sandur Manganese, which acquired Arjas Steel recently for ₹3,000 crore Enterprise Value. JNIL’s installed capacity of 1 MTPA is double compared to Arjas, implying a derived valuation of ~₹6,000 crore just for its integrated steel plant. As Arjas is not backward integrated with captive iron ore mines, JNIL’s intrinsic value should be much higher because of its captive mine, which doesn’t attract any premium, as these mines were allotted under the older regime. Similarly, Aichi Steel Corporation of Japan is investing ~₹385 crores in Vardhman Special Steel at ~₹260/share, increasing its stake in the company to 25% implying a valuation of 17x EV/EBITDA.
Given the significant integration from low-cost captive ore and power to fully rolled alloy steel, along with completion of debt refinancing, significant expected interest cost savings and removal of ACRE overhang, JNIL can potentially trade at a 10x EV/EBITDA - given the median industry multiple of 13x.
Financial and Volume Estimates:
Disclosure- Biased and Invested. Views are personal.
