Buy Mid Cap Metals Stock, Target Price Rs 900: Motilal Oswal Recommends

Motilal Oswal, a leading brokerage firm, has issued a buy call on Jindal Steel & Power Ltd. (JSPL), which has set a price objective of Rs 900. The current market price of JSPL stands at Rs 772.85. Shares of JSPL experienced a positive uptick, rising by 1.54% to Rs 783.50 on the BSE and by 1.58% to Rs 783.70 on the NSE.

Jindal Steel & Power Ltd., established in 1979, operates as a mid-cap company in the metals-ferrous sector, boasting a market capitalisation of Rs 79,169.04 crore. According to reports for the fiscal year that ends on March 31, 2023, the company's main revenue segments are iron and steel items, other operating revenue, scrap, and export incentives.

Financially, for the quarter ending December 31, 2023, JSPL reported a consolidated total income of Rs 11,736.40 crore, reflecting a decrease of -4.44% from the previous quarter and -5.88% from the same quarter last year. However, the company managed to achieve a net profit after tax of Rs 1,927.87 crore in the latest quarter.

In terms of ownership, promoters hold a 61.2% stake in JSPL as of December 31, 2023, while foreign institutional investors (FIIs) own 11.75% and domestic institutional investors (DIIs) own 15.32%.

Motilal Oswal emphasised JSPL's planned capital expenditure, which is expected to drive volume growth and reduce structural costs. JSPL has one of the healthiest balance sheets among Indian manufacturers, with a net debt of Rs 9,100 crore in the first nine months of FY24 and a net debt-to-EBITDA ratio at a healthy level of 0.9 times.

The brokerage highlighted that JSPL's stock trades at 5.2x FY26E EV/EBITDA and 1.3x FY26E P/B. Motilal Oswal reiterated its buy recommendation on the stock with a target price of Rs 900, based on 6x FY26E EV/EBITDA.

The recommendation from Motilal Oswal underscores the growth potential and strong fundamentals of Jindal Steel & Power Ltd., making it an attractive proposition for investors looking to capitalise on opportunities in the metals sector.

Jindal Steel & Power is a significant player in the steel, power, mining, and infrastructure sectors, with investments of USD 12 billion worldwide. The company is dedicated to scaling its capacity utilisation and efficiencies to contribute to the development of a self-reliant India.