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Motilal Oswal Report
With the addition of new ports, improving efficiency of current ports and terminals, and a large part of capex already undertaken, we anticipate cash flow generation to remain stable. We estimate that JSW Infrastructure Ltd. should generate ~Rs 78 billion in cumulative cash flow from operations over FY23-26.
This contribution will help to maintain a stable debt profile, even amid ongoing acquisitions. We initiate coverage on the stock with a 'Buy' rating and a target price of Rs 300 (premised on 18 times FY26E enterprise value/Ebitda).
The company's strategic focus on acquisitions, expanding share of third-party customers, and long-term contracts with JSW Group entities position it favorably to leverage growth opportunities in the transportation industry.
Key risks
A slowdown in domestic and global trade due to geopolitical disruptions could affect the company's port operations. Further, JSW Infra derives a substantial portion of its revenue from its top five customers, two of which are related parties.
If such customers were to suffer a deterioration of their business, cease doing business with the company or substantially reduce their dealings with JSW Infra, it may have a material impact on its business, results of operations, cash flows, financial condition and future prospects.
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