Jindal Stainless Q4 Results Review - Weak Quarter Affected By Low NSR, High Cost: Prabhudas Lilladher

Prabhudas Lilladher Report

Jindal Stainless Ltd. reported weak standalone operating performance in Q4 led by sharp 10% YoY decline in average net sales realisation, 5% decline in export volumes and higher costs. Although volume growth was stronger at 12% YoY, product mix deterioration has affected margins due to higher share of domestic business.

Management indicated negative impact of ~Rs 2.5 billion in Q4 on nickel inventory loss, higher freight cost and weak exports. We expect near term weakness to continue with slight improvement in Q1 led by higher stainless steel prices.

With NPI and newly acquired Chromeni assets getting commissioned in FY25, Jindal Stainless is expected to continue delivering strong 20% volume compound annual growth rate over FY24-26E.

We upgrade FY25E/26E Ebitda by 5%/10% incorporating recently announced capex of Rs 54 billion. We expect revenue/Ebitda/profit after tax compound annual growth rate of 29%/34%/41% over FY24-26E respectively.

At current market price, the stock is trading at 9.5 times/6.7 times enterprise value of FY25E/FY26E Ebitda.

Maintain ‘Hold’ rating with revised target price of Rs 712 (earlier Rs 705) valuing at seven times enterprise value of March-26E Ebitda.

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