Hold Jindal Steel and Power; target of Rs 978: Prabhudas Lilladher

Prabhudas Lilladher recommended hold rating on Jindal Steel and Power with a target price of Rs 978 in its research report dated July 25, 2024.

Broker Research

July 26, 2024 / 11:44 IST

hold

26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Jindal Steel and Power

Jindal Steel & Power (JSP) reported largely in-line standalone operating performance in 1QFY25 driven by 1.7% QoQ increase in NSR and 4% QoQ increase in volumes. Subsidiaries performance improved QoQ which has aided better than expected cons. EBITDA delivery. Going forward, as commissioning of BF-BOF is getting delayed by 2 quarters, our FY26E volumes of 10.3mt can be at risk; although Mgmt. reiterated its confidence of timely delivery of 4.6 mtpa blast furnace by Mar’25. Average 2QFY25 coking coal cost is expected to decline by ~USD30-35/t QoQ while domestic steel pricing is also coming off over last few weeks. Near term FY25E volume growth will depend upon RINL productivity which is struggling with multiple issues. JSP is well poised to take dual benefit of volume growth and improving product mix however if commissioning of ongoing capex gets delayed further, volume growth will struggle. Ramping up of pellet plant, conversion of semis at HSM and cost savings from captive coal mines would contribute to EBITDA margins by FY26E. We cut FY25/26E EBITDA by 2%/1% respectively to incorporate lower steel and RM prices and expect Revenue/EBITDA/PAT CAGR of 18%/31%/26% over FY24-26E.

Outlook

At CMP, the stock is trading at 8.1x/5.9x EV of FY25E/FY26E EBITDA which appear full. We downgrade the stock to ‘Hold’ from Accumulate’ earlier with revised TP of Rs978 (earlier Rs1,006) valuing at 6x EV of Mar’26E EBITDA and await better entry point.

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