Large Cap Metals Sector Stock To Buy, Shares Showing 27% Upside Potential, Says Motilal Oswal

Motilal Oswal has picked Jindal Steel & Power (JSP) with a Buy rating for a target price of Rs. 720 apiece. Considering the given target price, the stock can fetch up to 27% gains if purchased at the current market price. It is a large cap Metals-Ferrous sector company. It has a market capitalisation of Rs. 58,027.71 crore.

According to Motilal Oswal, JSP is all set to capture rising domestic steel demand amid the rapid expansion in infrastructure, railways, housing and construction. "We believe JSP is adding capacity at a right time to capture the robust growth opportunity. JSP is a leading integrated steel manufacturer (~9.6mt of crude steel production, the brokerage has said.

Buy for a Target Price of Rs. 720 apiece

According to the brokerage, "We expect demand to pick up as customers rush to stock up inventory before the monsoons. Demand is relatively stronger in 2H. Price improvements should also help JSP garner better margins. The stock trades at 4.5x FY25E EV/EBITDA. We reiterate BUY on the stock with a TP of INR720 (5.5x FY25E EV/EBITDA)."

Key downside risk: A delay in the commissioning of the Angul plant and coal mines may put pressure on the company. Any major write-off in international subsidiaries may impact margins.

Stock Outlook

On Friday, the shares of Jindal Steel & Power closed down 2.61% at Rs. 568.85 apiece. However the stock jumped 4.53% in the past 1 week, and 9.22% in the past 1 month, respectively.

The stock gave 83.59% positive return in the past 1 year, 288.96% positive return in the past 3 years, and 146.36% in the past 5 years, respectively.

It traded the 52 week high on 1 February 2023 at Rs. 622.75 apiece and 52 week low on 22 June 2022 at Rs. 304.20 apiece, respectively.

Disclaimer - The stock has been picked from the brokerage report of Motilal Oswal. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.