Motilal Oswal Financial Services initiated coverage on JSW Infrastructure Ltd with a 'buy' rating and a target price of Rs 300, which is over 21 percent higher than the stock's current market price of Rs 247.
Motilal Oswal believes that JSW Infrastructure's focus on strategic acquisitions, an increasing share of third-party customers, and long-term contracts with JSW Group companies could boost the company's growth prospects going forward.
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, Motilal Oswal said that it expects JSW Infrastructure to strengthen its market dominance, leading to a 19 percent volume CAGR over FY23-26. This should drive a 21 percent CAGR in revenue and a 25 percent CAGR in EBITDA, said the brokerage firm. It also expects JSW Infrastructure's cash flow generation to remain strong despite acquisitions.
Motilal Oswal said that with the addition of new ports, improving efficiency of current ports and terminals, and a large part of capital expenditure already undertaken, the cash flow generation of JSW Infrastructure is most likely to remain stable. According to the brokerage firm's estimate, JSW Infrastructure might generate approximately Rs 7,800 crore in cumulative cash flow from operations over FY23-26 which will help the company maintain a stable debt profile.
However, any slowdown in domestic and global trade due to geopolitical disruptions could affect JSW Infrastructure's port operations, highlighted Motilal Oswal.
JSW Infrastructure is engaged in developing and operating seaports, terminals, related infrastructure, and providing end-to-end logistic solutions. On February 26, the company's shares hit a 52-week high of Rs 276.20 rupees, as per the data on the NSE.
The shares of JSW Infrastructure have seen a whopping 57 percent gain in six months.
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