Motilal Oswal picks JSW Infra as 'top port stock'; share price soars 9%

JSW Infra share: Analysts see up to 47 per cent upside in JSW Infra share price

JSW Infra share price: JSW Infrastructure (JSW Infra) share price was trading higher in Friday’s market session. The stock advanced 9 per cent in the intraday trade today to hit a high of Rs 259.8 per share on the BSE. By comparison, the BSE Sensex index was down 383 points (0.51 per cent) at 11:40 AM.

 

The rally in JSW Infra share today came after domestic brokerage Motilal Oswal Financial Services picked the stock as its ‘Top Pick’ among other port-related stocks.

 

It assigned a 'Buy' rating to JSW Infra share with a target price of Rs 330 per share. This means JSW Infra shareholders can gain up to 39 per cent in the stock over the next one year.

 

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JSW Infra news

 

According to Motilal Oswal analysts, JSW Infra is set to expand its market share, leading to a 14 per cent volume CAGR over FY24-27, driven by solid growth levers at its existing ports and terminals, a higher share of third-party customers, stable cargo volume from JSW Group companies, and a diversification in portfolio.

 

JSW Infrastructure is a part of the Sajjan Jindal-led JSW Group. It is India’s second-largest commercial port operator with an operational capacity of 170 metric tonne per annum (MTPA). It operates three ports and seven terminals across India, including facilities on both the east and west coasts, with a combined capacity of 165 MTPA, as well as a 5 MTPA liquid storage terminal in Fujairah, UAE.

 

Analysts see JSW Infra stock as a compelling investment opportunity, driven by strong earnings growth potential, a solid balance sheet, and robust execution capabilities.

 

It reported a net profit of Rs 335.62 crore in the October-December quarter, clocking a growth of 32.35 per cent year-on-year. JSW Infra’s total income increased to Rs 1,265.31 crore in Q3FY25 as against Rs 1,018.30 crore in the year-ago quarter.

 

Besides, the company's Ebitda surged 20 per cent Y-o-Y to Rs 670 crore with Ebitda margin at 52.9 per cent.

 

It handled cargo volumes of 29.4 million tonne during the quarter, a growth of 5 per cent over the year-ago period. Within this, the third-party volume improved 31 per cent year-on-year, taking its share in the overall volumes to 49 per cent versus 39 per cent a year ago.

 

Going forward, JSW Infrastructure aims to expand its capacity by 2.4 times from 170 MTPA in FY24 to 288 MTPA by FY28 and 400 MTPA by FY30. This growth, the company said, will be driven by a combination of approved projects (88 MTPA), projects under review (93 MTPA), and potential projects (49 MTPA).

 

JSW Infra is also exploring inorganic growth opportunities in the ports and logistics sector, which could, analysts expect, enhance its capacity beyond the organic target of 400 MTPA.

 

"JSW Infra's strong growth has been fuelled by a mix of organic expansion and strategic acquisitions. Over the past five years (FY20–FY24), JSW Infrastructure has experienced a robust 45 per cent CAGR in volume growth. Looking ahead, the company is poised to maintain strong performance, with expected mid-to-high double-digit volume growth over the medium term, driven by the ramp-up of new port capacity and corresponding financial gains," said those at Dalal and Brocha Stock Broking Pvt Ltd.

 

The brokerage has pegged JSW Infra share price at Rs 350 per share, valuing the company at 42x P/E FY27E EPS.

 

JSW Infrastructure share hit a lifetime high of Rs 361 per share on July 4, 2024. It hit a record low of Rs 141.7 on October 3, 2023. The company’s market capitalization stands at Rs 53,372 crore with a price-to-earnings (P/E) ratio of 128.67x as per the BSE website.

 

India Port Sector Outlook

Meanwhile, analysts at Motilal Oswal believe the Indian ports sector is set to witness significant growth. Between FY23 and FY28, the country’s ports are projected to add 500-550 MTPA of capacity annually, driven by increased handling of petroleum, oil, lubricants (POL), coal, and containerised cargo.

 

Adani Ports & SEZ (15 per cent volume CAGR over FY19-24) and JSW Infrastructure (25 per cent volume CAGR over FY19-24) have outgrown the industry’s CAGR of 5 per cent through aggressive capacity expansion, strategic acquisitions, and integrated logistics solutions.

 

"While the industry growth rate is expected to be 4-7 per cent over the next five years, both Adani Ports, and JSW Infra are poised for sustained growth of 2-3x the industry. Both of these companies are likely to gain market share. Hence, we reiterate our ‘Buy’ rating on both the stocks," Motilal Oswal said.

 

On the bourses, Adani Ports share price fell 2.2 per cent intraday to hit a low of Rs 1,085 per share. Gujarat Pipavav Port share price, too, was down 1.8 per cent intraday.