JSPL shares crash over 10% after weak quarter, Citi has a 'Sell' on concerns over Rs 16,000 crore fresh capex

Shares of Jindal Steel and Power were sharply down by more than 10% on January 31 after a weak December quarter result that saw the net profit fall by 51% on year and the EBITDA margin slipped to 18.59% as against 24.30% a year ago.

Citi has recommended a Sell on the JSPL stock with a target price of Rs 765 per share while the shares trade below that mark. The note added that investors may be concerned about the recently announced Rs 16,000 crore capex, spread over next three years, till FY28. The new capital expenditure will not be adding any new steel manufacturing capacity but will be directed towards projects producing more value-added products, and to increase efficiency. Morgan Stanley has kept its 'Overweight' call on the stock but said that the additional capex has surprised them.

Read more on Jindal Steel's December quarter results right here. The net debt has gone up during Q3FY25, but it the context of expansion, the company called it reasonable in the earnings call. JSPL told analysts the company aims to target Return of Capital in high-teens, for all its plants, and maintained that a three-year capex of this magnitude is not very high for the scale of operations.

JSPL said India still being a net importer of steel during December quarter has impacted pricing and realisations for domestic steel makers. India's steel demand has increased progressively, driven by government's capex push, said JSPL, adding that the capacity and production continues to rise in line with Centre's vision of 300 MT capacity by 2030.