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How to buy JSW stocks in 2022

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Author: Mircea Vasiu Updated: August 1, 2022

JSW Steel is one of the leading steel companies in the world and one of India’s biggest holdings. It produces, distributes, and trades iron and steel products in the form of rolls, coils, and sheets or steel doors. The company exports to over 100 countries and employs more than 13,000 people.

This article aims to present the JSW Steel company in detail, from how it is doing business to the financial performance in the last years. Also, we will have a look at what possibilities exist to buy JSW stock and how can investors build confidence before investing in JSW stocks.

How to Buy JSWSTEEL Stocks in 5 Easy Steps

  1. 1
    Visit eToro through the link below and sign up by entering your details in the required fields.
  2. 2
    Provide all your personal data and fill out a basic questionnaire for informational purposes.
  3. 3
    Click 'Deposit', choose your favourite payment method and follow the instructions to fund your account.
  4. 4
    Search for your favourite stock and see the main stats. Once you're ready to invest, click on 'Trade'.
  5. 5
    Enter the amount you want to invest and configure your trade to buy the stock.

Everything You Need To Know About JSW

We will start by presenting more details about the JSW Steel business, beginning with its history and strategy, and continuing with how it makes money and how JSW stock has performed in recent years.

JSW History

The company was founded in 1982 by Prakash Jindal and, currently, it is headquartered in Mumbai, India. JSW Steel has expanded its Indian steelmaking capacity rapidly, from a mere 3.8 MTPA (Million Tonnes Per Annum) in 2006 to the current 18 MTPA. By 2024-2025, the company’s output is expected to reach over 37 MTPA.

What Is JSW’s Strategy?

As an integrated manufacturer of a diverse range of products, JSW Steel has one of the lowest conversion costs in the industry. This strategy allowed JSW Steel to compete in the international arena, stealing market share from other major players.

The company’s facilities are well connected to rail, road, and port, so quick logistics helped to slash costs further. It is a pioneer in introducing leading technologies in India and invests massively to stay up-to-date with the latest developments in the industry.

Through a series of strategic acquisitions and joint ventures, JSW grew its production capacity rapidly. Nowadays, it has become one of the leading groups in the industry, with further plans to expand its production capacity.

How Does JSW Make Money?

JSW Steel makes money by selling a diverse range of steel products such as galvanized coils and corrugated sheets. It also offers light steel building solutions. It caters to diversified markets across geographies and, at the same time, it expanded its efforts to drive a sustainable business.

How Has JSW Performed in Recent Years?

JSW stock price is on a tear higher in the last years. That is particularly true in the aftermath of the COVID-19 pandemic when supply bottlenecks led to a surge in the price of raw materials and commodities. Since the 2020 lows, the JSW stock price is up more than three times and currently consolidates near the highs.

JSW Fundamental Analysis

This part of the article deals with the company’s fundamental analysis. We will have a look at the JSW’s revenue and earnings-per-share, but also at the company’s cash flow position, the price/earnings ratio, and the dividend yield.

JSW’s Revenue

Revenue is the first line on a company’s income statement. The income statement reflects the company’s financial performance over a period, typically a quarter or a fiscal year.

Because it starts the income statement, the revenue is also called the “top line”. Effectively, it represents how much the company sold over the period or the total sales made during the period.

JSW Steel estimates for the FY 2021 are INR777,666 million, or about $10 billion, and expected to grow in the years ahead, reaching INR1,310,483 million by 2024.

JSW’s Earnings-per-Share

If the revenue is the top line on the income statement, the earnings-per-share or EPS are to be found at the bottom of the income statement. This financial metric shows the company’s profitability per one single share, and the higher the number, the better for the company and its shareholders.

EPS are presented as basic or diluted. JSW Steel EPS estimates for 2021 are INR 30.63, expected to more than double by 2022 and settle at 79.57 by 2024.

JSW’s P/E Ratio

The price/earnings ratio or simply the P/E ratio is another important metric used by investors in the process of valuing a company’s stock price. As an investor, you would want to see a small P/E ratio, but for all the good reasons.

For example, the P/E ratio is calculated by dividing the current stock market price by the earnings-per/share. So, it is the price of one share divided by the profit per one share. If the P/E ratio is super high, the stock price is not attractive to investors because it shows how many years it takes an investor to recover the investment.

JSW Steel’s P/E ratio in 2021 is estimated at 22.14, expected to decline significantly in the years ahead, settling at 8.73 by 2024.

JSW’s Dividend Yield

Not all companies choose to pay a dividend, but those that do so are attractive to dividend-seeking investors. Some investors like to own shares in a dividend-paying company because they can reinvest the dividends and thus increase the income compounding rate.

One of the metrics used to analyze the dividend is the dividend yield, which shows the size of the dividend paid compared to the company’s price. JSW Steel’s dividend yield is estimated at 0.45% in 2021, expecting to increase to 1.46% by 2024.

JSW’s Cash Flow

A company’s cash flow position is another relevant financial metric to interpret. The cash flow statement shows the cash flow detailed in areas such as investing, operations, and financing. Too much cash sitting idle is not desirable because of the opportunity cost, so each big company invests the extra cash via its treasury department in short-term securities designed to serve short-term liquidity needs. Long-term bonds are designed to finance the company’s liquidity needs in the long run.

Out of all, the free cash flow is, perhaps, the one to consider as it shows what is left after the company has covered all its costs of doing business. JSW Steel has a strong free cash flow position, one that is expected to double by 2024.

Why Buy JSW Stocks?

Commodities and raw materials are in great demand in the aftermath of the COVID-19 pandemic. Commodity prices increased significantly and shortages drive them even higher. The monetary and fiscal stimulus around the globe has led to the shortest economic recession in history, as the global economy recovered quickly. As such, strong growth lies ahead, with governments from advanced, emerging, or frontier markets laying down massive infrastructure investing plans.

Here are a few things that might make you buy JSW stocks:

  • Huge infrastructure spending plans worldwide.
  • Steel is 100% recyclable.
  • Commodity prices are in a bullish trend in the aftermath of the COVID-19 pandemic.
  • India’s economy on track to reach $5 trillion by 2024.

Expert Tip on Buying JSW Stock

Strong domestic demand suggests that JSW Steel will have room to increase production capacity, thus increase its profitability. In addition, the Indian economy is expected to grow rapidly in the years ahead and huge infrastructure plans have been laid out. JSW Steel stands to benefit from all these and the new investment projects announced around the world signal solid demand in the years ahead.
- Mircea Vasiu
Buy JSW Stocks Today!

5 Things to Consider Before Buying JSW Stock

Here are five things you might want to consider before buying JSW stocks with confidence.

Understand the Company

It all begins with having a clear understanding of the company’s business. Look at industry trends, the company’s product range, how it has performed recently, the challenges ahead, or how its financial position is. Make sure you know how the company earns its money and what might happen to come in the way of management’s plans. For that, a look at the management forward guidance is important, because it lays down the road for the years ahead.

Understand the Basics of Investing

Investing is not as easy as buying and forgetting. Some knowledge of investing terms is required and helps investors. Start with basic terminologies such as financial products and the role of a brokerage house, and move on to basic fundamental analysis. After that, try your hand at risk management strategies that help investors mitigate the risk of losing the funds.

Carefully Choose Your Broker

The broker is a crucial part of the investment process and a financial entity must regulate it. The financial authority requires that the broker complies with the local regulations and it is all to the customers’ benefit. Don’t be shy to check with the regulator the status of the broker’s license as the broker is your partner in the investing journey.

Unfortunately, not all brokers are regulated, and regulation brings trust. Besides regulation, you might want to invest with a broker that offers negative balance protection, has small bid-ask spreads, and segregates its customers’ funds from the funds needed to operate.

Decide How Much You Want to Invest

It is never wise to invest money you cannot afford to lose. Also, instead of investing everything in one business, think of spreading the investment over different industries and sectors, in order to reduce the risk of losing money. Ideally, try to add only uncorrelated assets to a portfolio and always have a decent cash position available so as to take advantage of opportunities that might arise.

Decide on a Goal for Your Investment

One of the first questions to ask yourself before starting the investment process is why you want to invest in the first place? Not everyone has the same goal for their investments, and therefore it is essential to know why are you doing it.

In some cases, investors prefer only dividend-paying stocks in order to build a future cash-flow stream for retirement. In some other cases, investors prefer to invest in a company simply because they enjoy the company’s products or services. Or, some other investors use the stock market as a vehicle of saving for retirement.

Depending on the goal for the investment, different strategies are more suitable than others. For example, a buy and hold strategy works fine for investing for retirement, but some investors prefer to speculate on the short-term market movements.

The Bottom Line on Buying JSW Stocks

JSW Steel is one of the fastest-growing conglomerates in India. It manufactures and sells steel products both on the domestic and international markets. It is constantly investing in new products and is committed to investing in meeting the global energy goals by continually reducing its carbon footprint. The company sells its products in more than one hundred countries in the world and it pays a dividend. With a strong free cash flow position, it stands to benefit from the domestic market growth and the JSW stock price has tripled since the COVID-19 pandemic lows.

If you are ready to invest, feel free to choose your broker from the list provided in this article and search for the company’s symbol. You may want to shortlist the name so as to have it at hand for later use. Next, you must decide how to invest – at the market price or using a pending order. If you trade at the market price, the broker will fill your order at the best current market price. 

On the other hand, if you want to buy only at a certain level, the broker gives you the tools to do so. For this, a pending buy stop order may be used to buy from higher levels, and a pending buy limit order to buy from lower levels. Why would anyone want to buy from higher levels? The answer is that to avoid consolidation and trade from a higher level means that a breakout might already happen.

If you are not yet confident to invest, feel free to check the other educational resources on our website. Also, make sure to check the Internet on additional material regarding investing and when ready, check the broker’s offering and the company’s stock. Ideally, you may want to start investing using a demo account, because this way, you’ll learn a lot about the conditions offered by the broker and the way financial markets function.

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Frequently Asked Questions

  1. India’s economy is on the verge of becoming a $5 trillion economy by 2024. Investments in infrastructure are expected in the years ahead, as the country prepares to invest over $1.4 trillion by 2024, in projects like doubling the length of highways. Most recently, the government announced a steel production target of 300 MTPA by 2031. Hence, JSW Steel stands to benefit from all the local developments.

  2. The company’s product range is extremely diverse. Think of TMT bars used in construction and infrastructure or special alloy steel used in the automotive sector. Moreover, JSW invests in new products, trying to capture niche markets such as advanced high-strength steel for automobiles.

  3. Challenges exist and some of them are independent of the management’s decisions. For example, a slowing global economy is one risk that may affect the company’s financial performance. Trade protectionism, slowing domestic consumption, or raw material availability are other examples.

  4. JSW Steel raised $750 million in December 2020 through an offshore bond of half a billion following by a tap issue of $250 million. It is rated AA- with a positive outlook at ICRA, BB- with a positive outlook at Fitch, and Ba2 with a positive outlook at Moody’s.

  5. To meet global energy and climate goals, the steel industry must cut emissions by at least 60% by 2050. Steel will be more popular than other materials, because of being affordable to use in multiple applications and is infinitely recyclable. JSW is prioritizing the making of stronger, responsible, and greener steel.

  6. India, Japan, the United States, and China, are the major top steel-producing countries in the world. China, in particular, holds the largest share, but it is also an importer of steel products. The largest steel consumption for the years ahead is expected to come from China and India.