Accumulate Jindal Stainless; target of Rs 814: Prabhudas Lilladher

Prabhudas Lilladher's research report on Jindal Stainless

Jindal Stainless (JDSL) reported weak but in-line standalone operating performance in Q2FY25. EBITDA/t at Rs17,833 was tad lower than PLe on product mix deterioration due to lower exports. Export volumes declined 20% YoY amidst global headwinds and weak demand in Europe & the US. The management has lowered the volume guidance for FY25 to 10-15% from ~20% earlier citing global challenges. However, domestic demand remains strong aided by planned railway infrastructure expansion and GoI’s focus on increasing usage of stainless steel (SS) in coastal areas. Things to watch out for: a) uptick in domestic demand post festivities in Q3FY25, b) recovery in export volumes post US elections, and c) SS and nickel pricing spreads. We expect JDSL to deliver strong 14%+ CAGR over FY24-27E as it has adequate capacity.

Outlook

We cut our FY25/26/27 EBITDA estimates by 7%/5%/3% incorporating lower SS volumes and pricing. We expect revenue/EBITDA/PAT CAGR of 16%/19%/25% over FY24-27E. At CMP, the stock is trading at 9.1x/7.4x EV of FY26E/FY27E EBITDA. Maintain ‘Accumulate’ rating with revised TP of Rs814 (earlier Rs849) valuing at 9x EV of Sep’26E EBITDA.

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Jindal Stainless - 21102024 - prabhu