Buy JSW Infrastructure; target of Rs 300: Motilal Oswal

Motilal Oswal's research report on JSW Infrastructure

Cargo volumes handled by JSW Infrastructure (JSWINFRA) exhibited YoY growth of 15% in FY24 to 106.5MMT from 93MMT in FY23 (three-year CAGR of 33% over FY21-24). Considering capacity ramp-up at existing ports along with higher share of volumes from third-party customers, we expect the growth momentum to continue. Volume growth in FY24 was led by higher capacity utilization at the Iron Ore and Coal Terminals in Paradip and an increase in the proportion of third-party cargo in the overall customer mix, with third-party cargo volume reaching 40% in FY24, from33% in the previous year.

Outlook

Considering stable growth levers at its existing ports and terminals, a higher share of third-party customers, sticky cargo volume from JSW Group companies and an expanding portfolio, we expect JSWINFRA to strengthen its market dominance, leading to a 15% volume CAGR over FY24-26. This should drive a 23% CAGR in revenue and a 27% CAGR in EBITDA. We reiterate our BUY rating with a TP of 300 (premised on 18x FY26E EV/EBITDA).