Buy Jindal Stainless: target of Rs 835: ICICI Securities

Moneycontrol • 6 days ago

Original source

Key Investment Pillars

  • Volume recovery: JSL's Q2FY27 sales volumes increased 3% YoY and 14% QoQ, supported by demand from automotive, railways, and white goods, with management expecting stronger volumes in H2FY27.
  • Improved EBITDA/t guidance: Raised to INR 20,000–22,000 from INR 18,000–20,000, reflecting a greater emphasis on value-added products and expected operating normalisation.
  • Downstream expansion: Commissioning of additional cold-rolling and downstream facilities should support higher volumes and value addition, although management did not quantify the incremental EBITDA contribution from individual assets.
  • Export-market diversification: JSL aims to sustain current export volumes and increase exports alongside overall volume growth, supported by diversification into non-European markets.

Thesis Validation Checklist

  • Volume growth: Watch for stronger volumes in H2FY27, with a focus on the ramp-up of new facilities and the absence of further disruptions.
  • EBITDA/t trends: Monitor the company's ability to maintain its revised EBITDA/t guidance, driven by operating leverage and value-added products.
  • Downstream expansion progress: Track the commissioning of additional cold-rolling and downstream facilities, and their contribution to volume growth and value addition.
  • Export market trends: Follow JSL's export volumes and diversification efforts, particularly in non-European markets, to assess the company's ability to mitigate the impact of lower European quotas.