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Prabhudas Lilladher Report
Jindal Stainless Ltd. reported strong consolidated operating performance in Q3, driven by strong volume growth and improvement in subsidiaries performance. We believe that Jindal Stainless will benefit from rising SS demand over next few years led by-
India's focus on infrastructure,
continuous evolution in new age sectors and
overall stronger domestic economy.
Next phase of expansion will be announced in Q4 FY24, which will drive volume growth beyond FY26. Jindal Stainless has delivered robust operating performance in the rising raw material scenario over last two years and continues to deliver in falling raw material pricing scenario too.
We believe that Jindal Stainless deserves to trade at higher multiples, as the company has maintained its per ton Ebitda guidance for next few quarters.
With 15% plus compound annual growth rate in stainless steel volumes over FY23-26E, we expect revenue/Ebitda/profit after tax growth of 14%/26%/29% respectively.
At current market price, the stock is trading at 7.9 times/6.5 times enterprise value of FY25E/FY26E Ebitda.
Maintain ‘Accumulate' rating with revised target price of Rs 660 (earlier Rs 583) valuing at seven times EV of March-26E Ebitda (earlier 6.5 times) on consistency of Ebitda per ton compared to its peers in carbon steel.
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