Jindal Steel & Power share price gains 3%: 2 key reasons why analysts expect 12-16% upside for the stock
- Stock Market Today: Jindal Steel & Power share price gained more than 3% in intraday trades on Wednesday. The ongoing expansions at its Angul Plant are are expected to drive growth keeping analysts positive on the stock. The raw material integration benefits are further to drive profitability.
Jindal Steel & Power share price gained more than 3% in intraday trades on Wednesday. The Jindal Steel share price that is up almost 32% since 1st November and also scaled 52-week highs in February itself.
Jindal Steel had impressed with the December quarter performance as its net profits more than doubled over the year-ago quarter. While the net realizations remained firm and volume growth was decent, declining input costs had helped.
The analysts had maintained strong outlook for Jindal Steel looking at- (1)its focus on raw material integration and (2) ongoing capacity expansions driving growth outlook.
Jindal Steel had commissioned the Gare Palma IV/6 coal mine and was able to achieved a production of 1mt (million tonne) during Q3. Jindal Steel also commenced production from Utkal C coal block and is gradually ramping up and these mines will drive coal supply security over time. Notably Jindal Steel's Australian coal mines already provide natural hedge against volatility in coal prices.
Meanwhile it is the ongoing capacity expansions that keep analysts upbeat on the outlook.
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The analysts at Motilal Oswal Financial Services in their recent report said that the ongoing capacity expansion at Angul (Odisha) will significantly enhance Jindal Steel and Power’s crude steel capacity by over 65% to 15.9mt. The planned expansion, which is expected to be completed by 3QFY26, will catapult Jindal Steel and Power as fourth largest steel manufacturer in India.
As these expansions will help drive its volume growth, they will also help reduce structural costs.
MOFSL has reiterated its BUY on the stock with a target price of ₹900 (6 time FY26 estimated Enterprise Value to Ebitda).
Analysts at JM Financial Institutional Securities post Q3 had also maintained buy ratings with target price of ₹870. As per JM Financial Jindal Steel has embarked on an ambitious capacity expansion plan (9.6 million tonne per annum to 15.9mtpa) to emerge as a flats (steel products) heavy player. The Angul capex program is a low-hanging fruit offering low-cost, short-gestation and value-accretive brownfield expansion, as per JM Financials.
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Higher domestic sales (the fourth quarter is typically the strongest for steelmakers) with additional volumes from RINL tie-up (JSPL operating one of its blast furnaces) and recently commissioned 6 mtpa hot-strip mill (HSM) would aid profitability through product mix improvement, said analysts at Antique Stock broking. Lower coal costs (further ramp up at Gare Palma IV/6 and Utkal block C), slurry pipeline (expected commissioning in 1QFY25 and reduced cost by ₹1,500 per ton of steel) will support FY25 margins. Antique Stock Broking post Q3 had given target price of ₹875 with Buy ratings.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions
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