Jindal Steel - Capacity Expansion, Raw Material Integration Aids Growth; Anand Rathi Initiates With A Buy

Anand Rathi Report

Jindal Steel and Power Ltd.’s strategic expansion would augment its crude steel capacity by 65% to 15.9 million tonnes and enrich its product mix. As India enters a nation-building phase, demand for steel is likely to be robust. Therefore, with the company’s huge capacity expansion, we factor in a ~24% sales volume compound annual growth rate over FY24-26.

Also, the company is strengthening raw-material integration and increasing the share of added products. Considering its strong focus on margin expansion, we expect it to achieve ~Rs 15,175 Ebitda/tonne by FY26.

With a 0.9 times net debt/Ebitda, it has one of the strongest balance sheets among domestic peers.

We, thus, initiate coverage with a Buy and a Rs 1,070 target price, 6.5 times FY26E enterprise /Ebitda.

Risks: Delay in capex execution and domestic slowdown.

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