Despite healthy YoY revenue growth, Jindal Saw's operating performance remained under pressure in H1 FY27, primarily due to geopolitical disruptions in the Middle East, elevated logistics costs, higher raw material prices and subdued DI pipe demand. However, Systematix believes the weakness is largely temporary, reflecting shipment delays rather than demand destruction. The company's confirmed order book of ~$1.15 billion, coupled with additional letter of intent's of ~$625 million, provides healthy medium-term revenue visibility, with conversion of LOIs into firm orders expected over the next five-six months.
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Systematix Report
Despite healthy YoY revenue growth, Jindal Saw Ltd.'s operating performance remained under pressure in H1 FY27, primarily due to geopolitical disruptions in the Middle East, elevated logistics costs, higher raw material prices and subdued DI pipe demand. However, Systematix believes the weakness is largely temporary, reflecting shipment delays rather than demand destruction.
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The company's confirmed order book of ~$1.15 billion, coupled with additional letter of intent's of ~$625 million, provides healthy medium-term revenue visibility, with conversion of LOIs into firm orders expected over the next five-six months.
The brokerage expects a gradual recovery in profitability from H2 FY27, supported by normalisation of export shipments, improved utilisation at the Nashik seamless facility following reinstatement of its API license, and a gradual recovery in DI pipe operations.
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Management expects margins to move towards double digits from Q4 FY27. The planned MENA capacity expansions, including the 300 ktpa seamless facility and Longitudinal Submerged Arc Welded/Helical Submerged Arc Welded joint venture, provide longer-term growth visibility, although execution timelines remain key monitorables.
The brokerage has cut its FY27E/FY28E Ebitda estimates by 22%/2% and introduce FY29 estimates, valuing Jindal Saw at eight times September 2028 EV/Ebitda to arrive at a revised target price of Rs 362/share.
Systematix has maintained its Buy rating, as it believes the current earnings weakness is due to uncontrollable factors rather than structural, supported by a healthy order pipeline, improving balance sheet and medium-term growth opportunities.
Key risks include prolonged geopolitical disruptions, a slower recovery in DI pipe demand and delays in MENA capacity expansions.
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