JSPL Shares Gain As Analysts Retain 'Buy' Calls After Q3

Here's what the brokerages have to say about JSPL's Q3 FY22 results...

Steel is melted at a furnace in the steel melting shop at a Jindal factory in Haryana. (Photographer: Udit Kulshrestha/Bloomberg)

Shares of Jindal Steel & Power Ltd. gained as most analysts retained their 'buy' calls after the third quarter, citing a recovery in sales volume, higher realisations, and deleveraging efforts.

The stock's trading volume was nearly 2.7 times the 30-day average volume at markets close..

Of the 27 analysts tracking the company, 24 rate a 'buy', two suggest a 'hold' and one recommends a 'sell', according to Bloomberg data. The 12-month consensus price target implies an upside of 31.3%.

Here's what the brokerages have to say about JSPL's Q3 FY22 results...

Motilal Oswal

  • Maintains 'buy' and raises target price to Rs 533 from Rs 478 earlier, an implied return of 22.77%.

  • Sales volumes declined due to extended monsoon in north India, construction ban in NCR region, Omicron variant and unseasonal rains in south India.

  • Reduction in Ebitda was due to a sharp rise in net raw material/conversion costs.

  • Raises FY22E/FY23E Ebitda estimate by 13.3%/14.5% to reflect higher steel sales volumes and better realisations as prices have improved since February 2022.

  • Expects improvement in domestic demand as Covid curbs gradually ease.

  • The company's focus to achieve zero net debt by the end of FY23 augurs well for the growth prospects.

Prabhudas Lilladher

  • Maintains 'buy' with a target price at Rs 555, an implied return of 27.95%.

  • Strong volume growth, conservative margins, attractive valuations are key positive factors.

  • Higher realisations in Q3 were offset by higher-than-expected increase in costs.

  • Q3 earnings marginally missed estimates. The company remains well placed for long-term growth.

ICICI Securities

  • Maintains 'hold' with a target price of Rs 433, an implied downside of 0.15%.

  • Decline in Q3 Ebitda was mainly due to high raw material costs.

  • With the divestment of Jindal Power, the company is likely to achieve its aim of turning net debt free by FY23E

  • Margin pressures due to a sharp rise in coking coal prices are likely to continue.

  • More spending on infrastructure projects, as announced in union budget, will give a boost to the industry.

IDBI Capital

  • Maintains 'buy' but cuts target price to Rs 536 from Rs 540, still an implied return of 28.69%.

  • Production has commenced from the recently acquired Kasia mine in Odisha, which has 278 million tonnes of iron ore of average Fe (iron) grade of 62.5%.

  • Production in Kasia mine will further facilitate the company growth ambitions.

  • The company will continue to deleverage balance sheet as it benefits from a strong steel cycle.

  • The stock is likely to be a rerating candidate over a couple of years as the company completes sale of power business, reduces debt, expands steel capacities and sells non-core overseas assets.

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WRITTEN BY
Bharath Rajeswaran
Bharath R is a senior website producer at BQ Prime. He tracks equity, curre... more
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