Shares of Jindal Stainless (JSL) surged 4% after Nuvama upgraded the stock to a ‘Buy’ and raised the target price to INR 836 (up from INR 756). This comes after the stock saw a ~20% correction last month due to weaker-than-expected volumes and profitability.
Key Highlights (as per Nuvama):
Earnings Bottomed Out in Q3FY25
JSL’s earnings are expected to recover, with a focus on long-term growth despite short-term challenges. Nuvama values the stock at 8.5x FY27E EV/EBITDA, seeing the correction as a buying opportunity.
Volume Growth to Accelerate
- H2FY25 Outlook: Domestic demand remains strong, with an anticipated 16% YoY growth.
- Export Recovery in FY26: Easing freight rates and improving demand in Europe and the US are expected to drive export recovery.
- FY27 Target: Projected volumes of 3.28mt, driven by new 1.2mtpa capacity in H1FY27.
Profitability Outlook
- Current EBITDA/t: ~INR 17,600 in H1FY25.
- Future Projections: Average INR 18,000 in FY26E and INR 19,000 in FY27E, supported by better product mix and export recovery.
Robust Capex Plans
JSL is investing ~INR 87bn during FY25–27E in expansion, including 1.2mtpa upstream and downstream capacities. By FY27, the company expects:
- RoCE to rise from 19% (FY25E) to ~25%.
- Net cash position of INR 2.9bn, with a focus on organic growth.
As of 9:42 AM, Jindal Stainless shares were trading 2.79% higher at Rs 623.30.
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