Buy Jindal Steel and Power; target of Rs 155: Edelweiss

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26 Aug, 2025 12:21

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Jindal Steel & Power's (JSPL) consolidated Q1FY18 EBITDA at INR13.5bn (up 32% YoY) was marginally ahead of consensus due to Jindal Power (JPL; EBITDA up 157% YoY to INR4.8bn) and Oman operations (EBITDA/t at ~USD90). We believe, additional steel volumes from Angul (~1.5mt) will be primary enabler for the company to turnaround by Q4FY18 despite power PLF remaining at 40% on an average. However, we believe, Supreme Court’s (SC) ruling on JSPL is likely to be an overhang on the stock. Taking cognizance of Q1FY18 results, we revise up FY18/FY19E EBITDA 2%/5%. On unchanged multiples, the value comes to INR176/share. However, adjusting for potential adverse impact (~INR21/share) of SC ruling (refer, Jindal Steel & Power - Regulatory risk, although core business stays in place; company update; Buy), we maintain our TP of INR155 and ‘BUY’.

Outlook We are optimistic on the long-term growth prospects of the company. However, the SC’s recent ruling is likely to be an overhang on the stock and we await better clarity on the case. Adjusting for the potential adverse impact (~INR21/share) of SC ruling, we keep our target price of INR155 unchanged. We maintain ‘BUY/SO’.

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