Stock To Buy: Leading Steel Manufacturing Stock's PAT Rises To Rs. 253 Cr, Robust Sales

Top brokerage firm ICICI Securities has given a buy rating to the stock of Jindal Stainless Hisar. The company, in Q2 FY23, the company's standalone operations reported sales volume stood at 183421 tonnes, higher than the brokerage firm's estimate of 172500 tonnes. Additionally, standalone operations EBITDA/tonne stood at Rs. 16085/tonne.

Stock To Buy: Target Price

The Current Market Price (CMP) of Jindal Stainless Hisar is around Rs. 298. ICICI Securities has estimated a Target Price for the stock at Rs. 351. This stock has the potential to give an 18% return, in the upcoming 12 months. It is a mid-cap stock with a market capitalization of Rs. 7,036 crore.

Stock Outlook
Current Market Price (CMP)	Rs. 298
Target Price	Rs. 351
Potential Upside	18.00%
52-week high share price	Rs. 431.95
52-week low share price	Rs. 189

Stock Valuation

Maintaining a buy rating, the brokerage firm said, "JSHL's share price has given a return of ~204% over the last two years (from Rs. 98 in November 2020 to Rs. 298 in November 2022). Going forward, for JSHL standalone operations, we model EBITDA/tonne of Rs. 18000/tonne each for both FY23E and FY24E. We value JSHL at Rs. 351, based on merger ratio. The next date of hearing is November 11, 2022. The merger process is expected to be completed within the current financial year."

Strong Q2 Earnings

Consolidated topline for the quarter was at Rs. 3926 crore, up 5%, 14% QoQ, in line with our estimate of Rs. 3924 crore. For Q2FY23, JSHL reported consolidated EBITDA of Rs. 323 crore, higher than our estimate of Rs. 287 crore. During the quarter, share of net profit from associates (equity method) was at Rs. 52 crore (down 57% YoY, 50% QoQ), lower than our estimate of Rs. 100 crore. Hence, ensuing consolidated PAT for the quarter was at Rs. 253 crore.

About the stock

Jindal Stainless (Hisar) (JSHL) is one of the leading players in the Indian stainless steel market. JSHL is the largest specialty stainless steel producer in India with a diversified value-added product portfolio. JSHL operates an integrated stainless steel plant at Hisar, Haryana. JSHL has a total melting capacity of 0.8 million tonnes per annum (MTPA).

Disclaimer

The above stock was picked from the brokerage report of ICICI Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.