Jindal Steel and Power (JSP) witnessed a 2% surge in its shares on the morning of September 29, following the reaffirmation of a ‘buy’ call by Motilal Oswal Financial Services (MOFS). The financial services firm has set a target price of Rs 790 for the steelmaker’s stock, citing potential upside from current levels.
MOFS emphasizes JSP’s strategic shift towards high-margin value-added products, constituting 65% of its sales. This transition has allowed JSP to strengthen its product portfolio across the value chain and enhance its revenue realization. With a comfortable net debt-to-EBITDA ratio of 0.75x, JSP boasts one of the most robust balance sheets among domestic manufacturers.
The positive outlook for Jindal Steel and Power also stems from its ambitious plans to expand its crude steel production capacity from 9.6 metric tonnes to 15.9 metric tonnes in the near future. This expansion entails a significant capital expenditure (capex) to bolster capacity and improve raw material integration and product enrichment. MOFS believes that this planned capex could lead to both volume growth and a reduction in structural costs for the company.
As of 10:45 am on the NSE, Jindal Steel and Power’s stock was trading at Rs 697.15, marking an increase of Rs 15.30 or 2.24%. The stock has been in a consolidation phase since September 1.
In its financial results for the April-June quarter, Jindal Steel and Power reported a 3.50% year-on-year decline in revenue from operations, totaling Rs 12,588 crore. The net profit for the quarter witnessed a 38.93% YoY drop to Rs 1,692 crore. Operating profit margins contracted by 500 basis points on a yearly basis, settling at 21%.
Jindal Steel and Power is primarily engaged in steel production and power generation, operating integrated steel plants that manufacture a wide range of steel products. Additionally, the company owns and operates two thermal power plants in Chhattisgarh and is involved in iron ore and coal mining.
Investors and market enthusiasts are keeping a close eye on JSP, anticipating further growth and development in line with its strategic initiatives and robust financial position.
