ICICI Securities Places Buy On Metal Stock, Sees 38% Upside, Gave Over 850% Return In 3 Yrs

ICICI Securities has placed a Buy on Jindal Stainless Ltd. (JSL) with a target price of Rs. 385/share. Considering the given target price, if you buy the stock at the current market price of Rs. 280.10/share, it is likely to give up to a 38% strong return. It has a market capitalisation of Rs. 23,056.17 crore.

Transient decline provides fresh opportunity

According to ICICI Securities, Despite tumbling 13% in the past one month, the Jindal Stainless (JSL) stock has delivered 112% return in the past six months. "We believe the stock deserves a fresh look as the fundamentals post-merger remain robust and we see a semblance of regulatory support emerging," the brokerage has said.

Key points: 1) company is on track to deliver 2.1mnte/2.7mnte in FY24/FY25 as capacity expansion at Jajpur is complete; 2) EBITDA/te is likely to sustain at Rs20,000 over next two years; 3) recent backward integration initiatives are likely to reduce external vulnerabilities; 4) Directorate General of Trade Remedies (DGTR) has recommended re-imposition of countervailing duty of 18.95% post the sunset review on import of 200 series from China; 5) new applications such as in railways and roads increase the opportunity size.

Buy For a Target Price of Rs. 385/share

"In our view, JSL is at the cusp of profitability/volume improvement largely on the back of commissioning of new capacity (1.0mtpa) and favourable regulatory shift. We value the merged entity at 6x EBITDA. Furthermore, the acquisition of JUSL is likely to improve margins by ~Rs4,000/te in our view. We introduce proforma merged entity numbers and roll over to FY25E. Our revised target price works out to Rs385 (earlier: Rs300) on 6x FY25E EBITDA," the brokerage has said.

Stock Outlook

On Tuesday, the share of Jindal Stainless closed 0.09% lower at Rs. 280.10/share. It traded its 52 week high on 8 March 2023 at Rs. 329/share and 52 week low on 20 June 2022 at Rs. 95.05/share, respectively.

The shares fell 3.53% in the past 1 week. It jumped 5.83% in 1 month. It has given 96.78% positive return in 1 year. In the past 3 years, it has given 878.78% multibagger return. In 5 years it has given 238.22% positive return.

About - Jindal Stainless Ltd. (JSL)

Jindal Stainless Ltd. (JSL) is a Metal sector midcap company. The company is one of the largest manufacturers of Stainless Steel flat products, in Austenitic, Ferritic, Martensitic and Duplex grades in India used in a variety of industries like automobile, construction, railways, consumer goods etc.

Disclaimer - The stock has been picked from the brokerage report of ICICI Securities. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.