Jindal Saw hits over 5-year high; zooms 94% in 3 months on healthy outlook

The company said that the future of the global steel pipe market looks promising with opportunities in oil and gas, water and wastewater, power generation, automotive, and other industrial sectors

Shares of Jindal Saw rallied 8.5 per cent to hit an over five-year high of Rs 177.15 on the BSE in Thursday’s intra-day trade on heavy volumes given the company's healthy outlook. The stock of the iron & steel products company was quoting at its highest level since January 2018. In comparison, the S&P BSE Sensex was down 60,103, at 10:22 am.

In the past three months, Jindal Saw has zoomed 94 per cent after the firm reported a multifold rise in its consolidated profit after tax at Rs 143.23 crore in the December 2022 quarter (Q3FY23) on strong operational performance. The company had posted a profit after tax of Rs 68 lakh in the year-ago period (Q3FY22).

The consolidated revenue from operations during the quarter under review grew 48.6 per cent to Rs 5,157.9 crore, against Rs 3,471.0 crore in the corresponding period of previous fiscal.

The company's profitability improved significantly on account of positive demand off take and superior execution across key pipe categories. However, the extreme volatility in foreign exchange rates (Indian rupee to US dollar) continued to impact the net profit of the company during the third quarter of the current financial year, it said.

Jindal Saw is a leading global manufacturer and supplier of iron & steel pipe products, pipe accessories and pellets, with manufacturing facilities in India, USA and Abu Dhabi (United Arab Emirates).

On the outlook, the company said that the future of the global steel pipe market looks promising with opportunities in oil and gas, water and wastewater, power generation, automotive, and other industrial sector.

The pipe industry in India is doing well on account of improved demand, normalization in the input prices as well as overall increased spending on infrastructure. The pipe demand is expected to grow, the company said.

There is a strong demand visibility in the water sector given government’s focus on ‘Nal Se Jal Yojana’ that will help the company maintain the growth momentum in DI segment.

The management said global demand for more cost-effective transportation will increase.  The cost of transporting fluids per unit weight per unit distance drops about by an order of magnitude for each mode of transport: air, surface, ship, and pipe. Furthermore, due to the too-short design life of many underground pipes already in use, robust pipes with longer life will be in demand. To develop the welding pipes market, pipeline design life should be greatly improved.

Technical outlook

Target: Rs 190

Shares of Jindal Saw seem to be in a firm bull grip with all the key moving averages exhibiting positive crossover on the daily and weekly charts. Moreover, with today's intra-day high of Rs 177, it has broken above the higher end of the Bollinger bands on both the charts (Rs 164.8 on daily chart and Rs 166.8 on weekly chart).

As per the monthly Fibonacci chart, the stock is likely to trade with a positive bias for the remainder of the month as long as it holds above Rs 159. On the upside, the stock can rally to Rs 190.

That said, while the momentum indicators seem to suggest strength in the rally, the stock has entered 'overbought' zone on the daily RSI-14 indicator. 

(With inputs from Nikita Vashisht)