Jindal Saw hits new high on strong Q4 results; zooms 91% thus far in 2023

Jindal Saw's board has also approved, in-principle, to dispose-off its subsidiary Green Ray Holdings Limited, UK along with its step down subsidiary, Derwent Sand SARL, Algeri

Shares of Jindal Saw hit a record high of Rs 198.25, as they rallied 13.5 per cent on the BSE in Thursday's intra-day, amid heavy volumes. The company, on Wednesday, reported strong March quarter (Q4FY23) earnings with consolidated net profit more-than-doubling to Rs 294 crore on the back of healthy operational performance. The stock has surpassed its previous high of Rs 179.65, touched on March 10, 2023.

The company, engaged in iron & steel business, had posted profit of Rs 121.84 crore in the year-ago quarter and of Rs 143.23 crore in the previous quarter.

Revenue from operations grew 30.7 per cent to Rs 5,188 crore from Rs 3,969 crore in the year-ago quarter. Earnings before interest, taxes, depreciation and amortization (ebitda) also increased 50 per cent YoY at Rs 600 crore; Ebitda margin improved 148 bps YoY at 11.57 per cent.

In a separate exchange filing Jindal Saw said its Board has approved, in-principle, to dispose off (either by way of sale or liquidation) Green Ray Holdings Limited, United Kingdom (subsidiary of the Company) along with its step down subsidiary, Derwent Sand SARL, Algeri.

Thus far in the calendar year, the stock price of Jindal Saw has zoomed 91 per cent as compared to 1 per cent rise in the S&P BSE Sensex. At 10:02 AM, it was quoting 12.5 per cent higher at Rs 196.55, as against 0.30 per cent gain in the benchmark index. The average trading volumes on the counter jumped four-times today with a combined 11.7 million equity shares having changed hands on the NSE and BSE.

Jindal Saw, the flagship company of the PR Jindal group, major products are longitudinal submerged arc welded (LSAW) pipes, helical SAW (HSAW) pipes, ductile iron (DI) pipes and seamless pipes and pellets.

The Company’s revenue is well balanced among various products with no single product contributing more than 30 per cent of its revenue. Most of the products contribute between 10 per cent to 30 per cent of the total revenue, thus providing diversification to the cash flows and hedge against market volatility related to any single product.

Jindal Saw has a strong presence in the overseas market, with export contributing around 25 per cent to its top line. A larger portion of the exports are to Latin American countries and MENA region. Almost half of the Company’s revenues come from water supply and sanitation (WSS), which is growing rapidly in India and globally.

The Company’s exposure to the oil and gas sector accounts for only one third of the total revenue. Due to its diversified portfolio, the Company has been able to protect itself from the volatilities in one or more strategic business units. Jindal Saw’s client portfolio includes the government and the private sector, with a strong domestic and international presence across brands.

Analysts believe that the company shall be able to report healthy operating performance on the back of its relatively de-risked business model with the benefits of diversification in terms of both product segments and manufacturing locations, and competitive cost structure with captive availability of iron ore for its pellet plant. Furthermore, favourable industry tailwinds on the back of government’s push towards investment in water sector and renewed focus on investments in global oil and gas sector shall benefit the company in the medium term.