Buy Jindal Steel and Power; target of Rs 842: Prabhudas Lilladher

Prabhudas Lilladher's research report on Jindal Steel and Power

Jindal steel & Power (JSP) reported strong operating performance in 3Q, despite weak volume growth (-5% YoY) in standalone business. EBITDA was better than our estimates, given strong realization and operating performance from overseas mining subsidiaries which aided margins. Average 3Q coking coal cost increased by ~USD32/t QoQ to USD281/t which is expected to rise further by ~USD15/t in 4Q. We believe with improving product mx and expected volume growth, JSP is better placed amongst peers. JSP is well poised to take dual benefit of volume growth and improvement in product mix over FY23-26E. Incremental volumes from pellet plant, conversion of semis at HSM and cost savings from captive coal mines would contribute to EBITDA margins.

Outlook

We expect Revenue/EBITDA/PAT CAGR of 8%/13%/26% over FY23- 26E. At CMP, the stock is trading at 6.9x/5.7x EV of FY25E/FY26E EBITDA. Maintain ‘BUY’ rating with revised TP of Rs842 (earlier Rs826) valuing at 6x EV of Mar’26E EBITDA.