At a Glance
Jayaswal Neco is a steel and iron casting company that should be minting money in a commodity bull run. Instead, it’s reporting low ROEs, wild swings in profit, and oh — 96.7% promoter pledge. FY25 profit fell 46%, yet the stock trades at a lofty 33x P/E. What gives?
1️⃣ Introduction with Hook
It’s not every day you see a steel stock with:
- 🧨 33x P/E
- 🩺 5% ROE
- 📉 -48% profit drop TTM
- 🤝 96.7% pledged promoter holding
Jayaswal Neco is not your average steel play. It’s a leverage-heavy, history-laden turnaround saga with a heavy side of suspense.
Let’s dive.
2️⃣ WTF Do They Even Do?
- 🏗️ Founded: 1976
- 🏭 Business:
- Pig iron
- Billets, sponge iron
- Steel castings (auto, engineering, construction)
- Pellets & power
It’s a fully integrated mid-tier steel + castings player — a rare combo that should offer margin advantage… if managed well.
3️⃣ Financials – Profit, Margins, ROE, Growth
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | ₹6,297 Cr | ₹5,887 Cr | ₹6,000 Cr |
| Net Profit | ₹227 Cr | ₹210 Cr | ₹113 Cr ⬇️ |
| EPS | ₹2.34 | ₹2.16 | ₹1.16 |
| ROE | 6% | 5% | 4.86% |
| OPM | 12% | 17% | 16% |
Despite stable revenue, profits dropped nearly 50% in FY25. Cost control is decent, but finance cost eats away at the bottom line.
4️⃣ Valuation – Is It Cheap, Meh, or Crack?
- CMP: ₹38.2
- EPS (FY25): ₹1.16
- P/E: 32.9x
- Book Value: ₹24.5 → P/B = 1.56x
- Market Cap: ₹3,711 Cr
Fair Value Range:
Let’s assume a fair P/E of 8–12x for a cyclical steel player with thin margins.
iniCopyEditFV = ₹1.16 × 8–12 = ₹9.3 to ₹13.9/share
Even if you generously factor in FY23 peak EPS (₹2.34):
iniCopyEditFV = ₹2.34 × 12 = ₹28/share
🚨 So ₹38 is way overpriced unless there’s a massive EPS spike pending.
5️⃣ What’s Cooking – News, Triggers, Drama
- 🧾 FY25 net profit down 46%
- 🆙 Promoter holding increased to 55.15% — but wait…
- 🤯 96.7% of promoter shares are pledged (no, not a typo)
- 🧨 Interest cost jumped to ₹562 Cr in FY25
- 💬 Zero dividend despite steady profits
It’s not a steel company. It’s a high-interest loan story with furnaces in the background.
6️⃣ Balance Sheet – How Much Debt, How Many Dreams?
| Metric | FY25 |
|---|---|
| Debt | ₹2,735 Cr |
| Equity + Reserves | ₹2,376 Cr |
| D/E Ratio | ~1.15x |
| Net Worth | Slowly rebuilding from deep losses till FY21 |
Debt has come down from ₹4,000 Cr+, but still remains high. Promoters are pledging shares to stay afloat — or raise working capital?
7️⃣ Cash Flow – Sab Number Game Hai
| Year | CFO | FCF | Comments |
|---|---|---|---|
| FY23 | ₹739 Cr | ✅ | Positive ops cash |
| FY24 | ₹681 Cr | ✅ | Solid |
| FY25 | ₹1,388 Cr | 💪 | Best in 3 years |
Despite profit fall, operating cash flow is strong — which hints at good collections and inventory control. But no dividend or CAPEX clarity yet.
8️⃣ Ratios – Sexy or Stressy?
| Metric | FY25 |
|---|---|
| ROE | 4.86% |
| ROCE | 12.6% |
| Debtor Days | 24 (👏) |
| Inventory Days | 170 (⬇️ from 226) |
| Interest Coverage | <2x |
| Dividend | 0% ❌ |
📛 Strong working capital discipline, but debt drag kills shareholder returns.
9️⃣ P&L Breakdown – Show Me the Money
- Revenue: ₹6,000 Cr
- EBITDA: ₹940 Cr
- Interest: ₹562 Cr
- PAT: ₹113 Cr
EBITDA is solid — but interest expense devours it. Almost 60% of EBITDA is spent servicing debt.
🔟 Peer Comparison – Who Else Is in the Furnace?
| Company | P/E | ROE | Debt/Equity | OPM |
|---|---|---|---|---|
| APL Apollo | 64x | 19.3% | 0.5x | 5.8% |
| Welspun Corp | 16.4x | 23.1% | 0.3x | 11.9% |
| Shyam Metalics | 26.3x | 9.0% | 0.2x | 12.3% |
| Jayaswal Neco | 32.9x | 4.9% | 1.15x | 16% |
It’s more leveraged and lower ROE than most peers — yet priced at a premium.
Make it make sense.
1️⃣1️⃣ Miscellaneous – Shareholding, Promoters
| Type | Mar 2023 | Mar 2025 |
|---|---|---|
| Promoters | 48.03% → 55.15% 🔼 | |
| FIIs | Near zero | |
| Public | 51.9% → 44.8% |
Retail is reducing. Promoters buying — but pledging. We call this “double-edged shareholding.”
🧠 EduInvesting Verdict™
🔩 Jayaswal Neco is like a forged steel sword… heavy, shiny, but brittle under stress.
- Great operating leverage ✅
- High debt burden ❌
- 96.7% pledge 🚨
- Profit growth inconsistent ❌
- Overvalued by 20–50% ❌
Unless debt magically disappears or steel prices shoot up, this is not a value buy — it’s a value illusion.
🎯 Fair Value Range: ₹13 – ₹28/share
✍️ Written by Prashant | 📅 30 June 2025
Tags: Jayaswal Neco, Steel Stocks, Pledged Shares India, High Debt Companies, Metal Sector India, EduInvesting Deep Dive, Turnaround Stocks, Promoter Red Flags
