Buy Jindal Steel & Power; target of Rs 1200: Motilal Oswal

Motilal Oswal's research report on Jindal Steel & Power

Jindal Steel & Power (JSP)’s 1QFY25 revenue stood in line at INR136b (YoY/ QoQ: +8%/+1%), driven by decent volume growth. Sales volume came in at 2.09mt (YoY/QoQ: +14%/ +4%) vs. our est. of 2.02mt. Production volume stood at 2.05mt (YoY/QoQ: flat) in 1QFY25.EBITDA came in at INR28b (YoY/QoQ: +8%/+16%), 8% below our est. of INR31b led by higher-than-expected cost and weak realization. EBITDA/t was INR13,585 (YoY/QoQ: -5%/+12%) vs. our est. of INR15,195 in 1QFY25.APAT for the quarter stood at INR13b (YoY/QoQ: -21% /+43%) vs. our est. of INR14b. The share of exports reduced to 7% in 1QFY25 vs. 11% in 4QFY24.Net debt stood at INR104.6b at the end of Jun’24 (vs. INR112b at the end of Mar’24). Net debt-to-EBITDA stood at 1x as of Jun’24 vs. 1.1x at Mar’24.

Outlook

We broadly retain our estimates and reiterate our BUY rating on JSP with a TP of INR1200, based on 7x FY26E EV/EBITDA. The stock is currently trading at 5.8x FY26E EV/EBITDA and 1.7x FY26E P/B.