Buy Jindal Stainless; target of Rs 870: Motilal Oswal

Motilal Oswal's research report on Jindal Stainless

Jindal Stainless (JDSL) is executing a strategy to support sustainable longterm growth, which focuses on: 1) capacity expansion, 2) raw material security, and 3) product diversification and value addition. The aim is to create long-term growth headroom while insulating the business from scrap price volatility and expanding margins. The company’s consolidated melt capacity will rise 40% to ~4.2mtpa by FY27, with downstream capacity to increase 1.2x the total melt capacity. Indonesia JV: JDSL’s 1.2mtpa SMS JV in Indonesia (scheduled for commissioning by FY26) involves a total outlay of INR14.5b (JSL share: INR7.1b), translating into USD143/t, which is well below the global Greenfield cost of USD220–230/t.

Outlook

At CMP, the stock trades at 10.2x EV/EBITDA and 2.7x P/BV on FY27E. We reiterate our BUY rating with a TP of INR870 (premised on 11x EV/EBITDA FY27 estimate).

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