Buy JTL Industries; target of Rs 470: Axis Securities

Axis Securities is bullish on JTL Industries has recommended buy rating on the stock with a target price of Rs 470 in its research report dated June 27 2023.

Broker Research

June 27, 2023 / 18:41 IST

Buy

Axis Securities report on JTL Industries

We initiate coverage on JTL Industries Ltd (JTL) with a BUY recommendation and a Target Price of Rs 470/share, implying a 36% upside from the current levels. JTL has been operating in the structural steel tubes and pipes business for the last 30 years, led by an experienced management team with over 30 years of experience in the steel and pipes industry. The company manufactures ERW black and hollow steel tubes and pipes. It also sells solar module mounting structures/panels and Hot dipped galvanised steel tubes and pipes which are value-added products (VAP) having higher premiums compared to the commercial ERW pipes. JTL continues to expand its capacity and has increased it to 0.586MT in FY23 from 0.4MT in FY22. It has been successful in expanding its footprints globally with over 1,000 client-centric SKUs. The company currently exports its products to 5 continents in over 20 countries and has a strong domestic distribution network of 800+ distributors.

Outlook

With the volume expansion Capex going on, the company’s ROE and ROCE are expected to moderate but would remain decent near 20% over FY24-26E (APL Apollo’s ROE/ROCE stood at 23.5%/29.2%). We initiate coverage on JTL with a BUY rating and value it at 22x its FY25 EPS to arrive at our 1-year forward target price of Rs 470/share, implying an upside potential of 36% from the CMP. We see 22x as a reasonable valuation for JTL given its healthy return ratios despite being in an aggressive growth Capex stage.

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