Jindal Stainless Ltd. share price target

We present a stock idea Jindal Stainless Ltd. (JSL), the gold standard in stainless steel and on the verge of business evolution, with a fair value of Rs260. With its merger with Jindal Stainless Hisar (JSHL), the merged entity will command a towering 55% share, with limited competition. JSL's port and raw material proximity, international finishing capabilities coupled with JSHL's strategically located facility in key domestic consumption centres will drive synergies in the merged entity. The doubling of JSL's steel melt shop capacity and expansion of JSHL's value added Special Product division should be a growth accelerator, with emerging sources of demand such as Auto, railways and infrastructure. JSL's...

Consolidated EBITDA was at | 569 crore, up 47% YoY and flattish QoQ, higher than our estimate of | 558 crore. Consolidated PAT was at | 515 crore, up 91% YoY and 3% QoQ, higher than our estimate of | 482 crore...

Consolidated EBITDA was at | 797 crore, up 68% YoY and 7% QoQ, higher than our estimate of | 740 crore. Consolidated PAT was at | 442 crore, up 160% YoY and 7% QoQ, higher than our estimate of | 408 crore What should investors do? Jindal Stainless' share price has given a return of...

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....