JSW Steel & Acutaas Chemicals: Kotak's Top Stock Picks for 2026

Introduction: Key Recommendations from Kotak Securities

On February 10, 2026, Kotak Securities highlighted two distinct investment opportunities in the Indian market, issuing recommendations for JSW Steel and Acutaas Chemicals. Analyst Shrikant Chouhan suggests an 'ADD' rating for the steel major, citing potential for significant volume growth and margin recovery. Simultaneously, the brokerage placed a 'BUY' rating on Acutaas Chemicals, pointing to its strong earnings momentum driven by its Contract Development and Manufacturing Organization (CDMO) business. These recommendations provide investors with insights into a large-cap industrial player and a high-growth specialty chemicals firm.

JSW Steel: Poised for Growth and Margin Recovery

JSW Steel's recent performance and strategic initiatives form the basis of Kotak's positive outlook. The company reported a consolidated EBITDA of ₹6,620 crore in Q3FY26, marking a 23% year-on-year increase. While this was a 16% sequential decline, the figures were largely in line with estimates. The India steel division's adjusted EBITDA per tonne stood at ₹8,478, impacted by lower realisations during the quarter. However, steel volumes from its India operations were robust at 7.4 million tonnes, a 13.5% year-on-year rise.

The company's growth trajectory is supported by ambitious expansion plans. JSW Steel announced a significant 5 million tonnes per annum (mtpa) greenfield capacity addition in Odisha, with a capital expenditure of ₹31,600 crore. This project, along with other planned additions at BPSL, Dolvi, Kadapa, and Vijayanagar, provides clear visibility for reaching a total capacity of approximately 47 mtpa by FY2030. This expansion is designed to meet growing domestic demand, which is bolstered by supportive government policies.

Strategic Deleveraging and Market Dynamics

A key strategic move is the planned monetization of its stake in BPSL through a joint venture with JFE. This transaction is expected to reduce the company's debt by a substantial ₹3,700 crore by the first half of FY27. This deleveraging provides JSW Steel with additional financial flexibility to pursue its growth-oriented capital expenditure without straining its balance sheet. Several brokerages, including Morgan Stanley and Jefferies, view this deal as a positive step that strengthens the company's financial position.

Market conditions are also turning favorable. Domestic hot-rolled coil (HRC) prices have seen a significant increase of about ₹5,000 per tonne from their December 2025 lows. This price recovery, combined with seasonally strong demand, is expected to support margin expansion in the coming quarters. While higher coal costs may partially offset these gains, the overall outlook for profitability remains positive. Kotak Securities forecasts a 10% compound annual growth rate in volumes for the India division over the next three years, with EBITDA per tonne projected to improve steadily.

Acutaas Chemicals: A CDMO-Powered Growth Story

Acutaas Chemicals presents a different kind of growth narrative, rooted in the high-value specialty chemicals sector. The company has successfully transitioned from a manufacturer of intermediates to a diversified platform with a strong focus on advanced pharmaceutical ingredients. This segment now contributes around 85% of its revenues, with the CDMO business acting as a powerful growth engine.

Unlike traditional manufacturing, the CDMO model involves close collaboration with pharmaceutical innovators to develop and produce molecules. This approach creates long-term supply chain integration, resulting in more stable revenues and superior margins. The company's Q3FY26 results demonstrated the strength of this model, with sharp revenue growth and meaningful margin expansion. This performance led management to raise its full-year growth guidance to approximately 30%, reflecting strong confidence in its order book.

Diversification into High-Growth Verticals

Beyond pharmaceuticals, Acutaas is strategically expanding into other high-potential areas. The remaining 15% of its revenue comes from specialty chemicals for the electronics, semiconductor, and battery industries. The company manufactures electronic-grade photoresist chemicals, a niche segment with high entry barriers. It is also developing electrolyte additives for batteries, which are critical for improving performance and safety. While these verticals are currently smaller, they provide a long-term growth runway linked to the clean energy and digital infrastructure megatrends.

The company's financial position is robust, characterized by low debt and improving return ratios like ROCE and ROE. Kotak Securities values Acutaas at 35 times its earnings, maintaining a 'BUY' rating with a fair value target of ₹2,350. The strong momentum in the CDMO business, coupled with the gradual scaling of its battery and semiconductor chemical verticals, underpins a compelling long-term investment case.

Conclusion: Two Distinct Opportunities for Investors

The recommendations for JSW Steel and Acutaas Chemicals offer investors two different pathways to potential growth. JSW Steel represents a value and growth opportunity in the core industrial sector, driven by capacity expansion, strategic deleveraging, and a cyclical recovery in steel prices. Acutaas Chemicals offers a high-growth opportunity in the specialty chemicals space, powered by its high-margin CDMO business and strategic diversification into future-facing industries. Both selections by Kotak Securities are backed by clear financial metrics and strategic initiatives that are expected to drive performance in the coming years.