JSW Steel Faces Significant Earnings Impact if Bhushan Power & Steel Liquidates Analysts had initially projected JSW Steel to report a consolidated EBITDA between INR 42,000-45,000 crore for the fiscal year beginning April 1, 2025. However, this estimate may fall short by INR 4,000-4,500 crore without contributions from Bhushan Power & Steel

JSW Steel could face a production loss of approximately 10-15 per cent and a reduction of around 10 per cent in its earnings before interest, tax, depreciation, and amortisation (EBITDA) if its subsidiary, Bhushan Power & Steel, heads into liquidation, according to industry analysts.

Analysts had initially projected JSW Steel to report a consolidated EBITDA between INR 42,000-45,000 crore for the fiscal year beginning April 1, 2025. However, this estimate may fall short by INR 4,000-4,500 crore without contributions from Bhushan Power & Steel.

JSW Steel had acquired Bhushan Power & Steel from bankruptcy proceedings in 2019 at INR 19,700 crore, marking the largest acquisition made by the Sajjan Jindal-led steelmaker. The Supreme Court on Friday rejected JSW Steel's insolvency resolution plan for Bhushan Power & Steel, declaring it illegal despite its previous approval by the National Company Law Tribunal in 2019.

Currently, Bhushan Power & Steel contributes over 13 per cent to JSW Steel's total production capacity of 34.2 million tonnes. Since becoming a subsidiary in October 2021, JSW Steel has invested INR 3,500-4,500 crore in capital expenditures for Bhushan Power & Steel's growth and maintenance. Bhushan Steel had already expanded its capacity from 2.75 million tonnes at acquisition to 4.5 million tonnes, with plans to further increase capacity to 5 million tonnes by September 2027.

The anticipated capacity of Bhushan Power & Steel was expected to reach 10 million tonnes by 2030-31, contributing significantly to JSW Steel's broader objective of achieving a 50 million tonne domestic production capacity by then.

Despite financial creditors agreeing to refund JSW Steel if the Supreme Court invalidates the resolution plan or denies immunity concerning money-laundering cases involving previous promoters, analysts believe JSW Steel could still incur substantial losses.

"Bhushan accounts for about 10-12 per cent of JSW's earnings and valuation. At JSW's current enterprise value, Bhushan would be around INR 33,000-35,000 crore, as against the INR 19,500 crore for which it was acquired in 2021," said Satyadeep Jain of Ambit Capital.

He further added, "We will need more clarity on the ruling—on rights over earnings and cash outflow on this asset for the past four years, on opportunity cost for JSW on acquisition value, and on legal recourse available with JSW. But as of now, even with the refund, it looks like a loss of about INR 15,000 crore for the company."