Buy Jindal Steel; target of Rs 1270: Motilal Oswal
Moneycontrol • 6 days ago
Key Investment Pillars
- Production volume growth: Jindal Steel aims to achieve FY27 production volume of ~11mt, with ~6mt target in 2H, driven by its crude steel capacity expansion to 15.6mtpa.
- Improved product mix: The company targets a product mix of 65% flats and 35% long products, with a focus on higher-priced flat products, which is expected to enhance realizations.
- Steady domestic steel prices: The prevailing safeguard duty is expected to keep domestic steel prices steady, supporting margins despite input cost volatility.
- Cost savings and efficiency: The company has achieved significant fuel cost savings by switching to syngas and is expected to benefit from the commissioning of the Utkal B2 coal mine and government incentives for coal gasification.
Thesis Validation Checklist
- Volume growth: Monitor the company's ability to achieve its production volume targets, particularly in 2H.
- Product mix: Track the company's progress in achieving its target product mix and the impact on realizations.
- Domestic steel prices: Keep an eye on the trend in domestic steel prices and the company's ability to maintain its margins.
- Cost savings: Monitor the company's ability to sustain its cost savings initiatives and the impact on its profitability.