Jindal Stainless jumps 3% as MOFSL initiates coverage, 26% upside seen

Jindal Stainless is planning to expand its manufacturing capacity from 3 metric tons (mt) to 4.2 mt by FY27

Jindal Stainless share price today: Shares of stainless-steel manufacturer Jindal Stainless rose around 3 per cent on Tuesday, hitting an intra-day high of ₹632.2 on the National Stock Exchange (NSE) after the Motilal Oswal Financial Services (MOFSL) initiated its coverage with a 'Buy' rating on the stock. The brokerage firm has set a target price of ₹770, which shows an upside of 26 per cent from its last closing price of ₹610. 

 

Considering the robust demand, capacity expansion plans, and a focus on value added products, analysts at MOFSL expect Jindal Stainless to achieve a 14 per cent CAGR (compound annual growth rate) of revenue growth driven by volume growth of 10 per cent CAGR, along with net sales realisation (NSR) improvement of 4 per cent CAGR between FY25 to FY27.  

 

 

The company is planning to expand its manufacturing capacity from 3 metric tons (mt) to 4.2 mt by FY27. It is aggressively expanding its capacity and enhancing backwards integration to drive sustainable and profitable growth. In addition, the company's focus on enhancing its value-added portfolio further supports margins, according to Motilal Oswal 

 

"Strong topline growth, coupled with improved cost structure, is expected to drive an Ebitda/APAT CAGR of 17/21 per cent over FY25-27. With strong cash flow generation and steady capex outflow, we expect Jindal Stainless to generate strong cash flow during FY26-27E, which can further be utilised for deleveraging," the brokerage said.

 

According to MOFSL, Jindal Stainless has streamlined its corporate structure by merging with its promoter holding company, Jindal Stainless - Hisar and acquiring key assets. The acquisition resulted in increased capacity, enhanced backwards integration, downstream product diversification and value addition. 

 

Jindal Stainless has deleveraged its balance sheet from the peak of ₹103 billion during FY16 to ₹40 billion as of FY25. The brokerage firm expects its operating cash flow (OCF) to come in at ₹62 billion, which will be sufficient to fund the ongoing capex of ₹40 billion during the next two years. 

 

At the current market price (CMP), the stock trades at 8.4x EV/Ebitda on our FY27 estimate. We initiate coverage on the stock with a 'Buy' rating and a target price of ₹770 (premised on 10x FY27E EV/EBITDA)," the brokerage said. Analysts at MOFSL believe that Jindal Stainless's focus on strategic acquisitions and greater raw material security will further strengthen its growth prospects.