Jindal Stainless Ltd. share price target

Decline in Chinese stainless steel prices has compressed the converter spreads (Chart 1). We are not sure when exactly the spot will percolate into Jindal Stainless (JSL) or Jindal Stainless (Hissar) (JSHL) spreads, but we continue to build in ~Rs17,500/te of normalised spreads for FY23/24E (from Rs27,000/te expected in Q3FY22).

About the stock: Jindal Stainless (JSL) is India's largest stainless steel We maintain our BUY rating on the stock Target Price and Valuation: We value JSL at | 200, based on a merged entity basis...

We hosted the management of Jindal Stainless (JSL). Management clarified the company’s product level strategy underlining the resurgence in demand that the 400 series sees in India. Expansion from 1.9mtpa to 2.9mtpa stays on track. Existing capacity will lead to 15-20% volume growth in FY22. Management pointed
at its continued focus on deleveraging and guided for start of dividend payout as merger between JSL and Jindal Stainless (Hissar) (JSHL) concludes, likely in the
near term.

JSL is augmenting is stainless steel melt capacity from 1.1 MTPA to 2.1 MTPA and also enhancing downstream capacity with 1.6x expansion of hot rolled annealed pickled (HRAP) from 0.8 MTPA to 1.25 MTPA and 1.7x expansion of cold rolled annealed pickled (CRAP) from 0.45 MTPA to 0.75 MTPA. It is also expanding backward integration with 1.4x expansion of ferro chrome from 0.25 MTPA to 0.35 MTPA The estimated total growth capex is ~| 2150 crore wherein melting capex is | 530 crore (to be completed by Q3FY23), downstream enhancement...

The merger process of JSHL into JSL is progressing well and is expected to be completed in H2FY22. Hence, we value JSL on a merged entity basis and arrive at a target price for JSHL based on the announced swap ratio. We arrive at a target price of | 125 for JSL (earlier | 90), maintaining our BUY recommendation on the stock. Subsequently, as per the announced swap ratio, we arrive at a target price of | 244 for JSHL (earlier target price | 170), maintaining our BUY recommendation on the stock....

The merger process of JSHL into JSL is progressing well and is expected to be completed in H2FY22. Hence, we value JSL on a merged entity basis and arrive at a target price for JSHL based on the announced swap ratio. We arrive at a target price of | 125 for JSL (earlier | 90), maintaining our BUY recommendation on the stock. Subsequently, as per the announced swap ratio, we arrive at a target price of | 244 for JSHL (earlier target price | 170), maintaining our BUY recommendation on the stock....

Both boards approve merger of JSHL into JSL Key highlights of proposed scheme The board of directors of Jindal Stainless (JSL) and Jindal Stainless (Hisar) (JSHL) have accepted the recommendations of the respective board committees and approved the merger of JSHL into JSL. The transaction between Jindal Stainless (Hisar) and Jindal Stainless Ltd is an all-equity merger. As per the approved share swap ratio, 195 equity shares of JSL will be issued for every 100 equity shares of JSHL. Furthermore, as per the...

Both boards approve merger of JSHL into JSL Key highlights of proposed scheme The board of directors of Jindal Stainless (JSL) and Jindal Stainless (Hisar) (JSHL) have accepted the recommendations of the respective board committees and approved the merger of JSHL into JSL. The transaction between Jindal Stainless (Hisar) and Jindal Stainless Ltd is an all-equity merger. As per the approved share swap ratio, 195 equity shares of JSL will be issued for every 100 equity shares of JSHL. Furthermore, as per the...

JSL mulls consolidating its stainless steel business: JSL's Board had appointed a committee to explore and evaluate various options of consolidating of the stainless steel business of JSL and Jindal Stainless (Hisar) by the way of a scheme of arrangement. Hisar has a capacity of 0.8 mtpa. The merger/ scheme of arrangement, if it happens, will have...

At the CMP of Rs.64, JSL is trading at an EV/EBITDA of 5.2 x FY19E. We initiate with a BUY on JSL with a target price of Rs.127 (FY21 EV/EBITDA of 5x), which represents an upside of 98.4% over 18 months.