This stock gave 69.4% returns last year; should you invest now? Know what analysts say Strong domestic volumes, an uptick in nickel prices and low-cost inventory supported the performance. The company is seeing demand challenges in its key export markets of the US and EU. To manage market share, it is focusing on newer markets—Japan, South Korea and the Middle East
Jindal Stainless: The stainless steel manufacturer reported a decent performance on a sequential basis in the June 2024 quarter at both, standalone and consolidated, levels. On a standalone basis, both EBITDA and PAT grew by 21.4% quarter-over-quarter, whereas on a consolidated basis, these profit measures registered a growth rate of 17.1% and 29%, respectively.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;} Compared to estimates, consolidated EBITDA and net profit surpassed Reuters-Refinitiv estimates by 7% and 10.5%, respectively. Strong domestic volumes, an uptick in nickel prices and low-cost inventory supported the performance. The company is seeing demand challenges in its key export markets of the US and EU. To manage market share, it is focusing on newer markets—Japan, South Korea and the Middle East.
The company has manufacturing and processing facilities in India, Spain and Indonesia, and a network in 12 countries. It is expected to benefit from healthy demand prospects of stainless steel, which is driven by its properties like corrosion resistance and recyclability. While the former reduces maintenance load on public resources, the latter offers the lowest life cycle emission and lessens the load on environment.
The government’s focus on infrastructure development, increased demand from railways, process industries, and architecture, building and construction sectors, and new applications like ethanol and green hydrogen production, are other factors that are driving the stainless steel industry. The recent Budget announcement of removing the basic customs duty on ferro-nickel will prove beneficial. According to the company’s 2022-23 annual report, the Indian stainless steel industry is set to grow at a CAGR of 7.5% for the next 5-10 fiscal years.
The capex program is expected to support long-term performance by improving volumes, strengthening raw material security and boosting profitability. It has guided a capex of Rs.5,500 crore for 2024-25 for enhancing its stainless steel capacity from 3 MT (million tonne) to 4.2 MT, expanding downstream lines and upgradation of infrastructural facilities in Jajpur, Odisha. Besides, the acquisition of a Gujarat-based cold rolling mill will enhance its ability to deliver high-quality products.
The board has approved raising up to Rs.5,000 crore recently, which may be used for the next round of expansion. Though the capex plans will result in incremental debt, analysts expect the debt to peak in 2024-25 as most of the capex will be incurred in the next 12 months. A recent PhillipCapital report states that better volumes (after the planned capex) and relatively lower capex thereafter will generate sufficient cash inflows to enable the company to reduce most of the debt by 2026-27. The stock has significantly outperformed the market benchmark in the past year with 69.4% returns, compared to the BSE Sensex with 19.7% returns.
Selection methodology: We pick the stock that has shown the maximum increase in ‘consensus analyst rating’ during the past three months. The consensus rating is arrived at by averaging all analyst recommendations after attributing weights to each of them (1 for strong buy, 2 for buy, 3 for hold, 4 for sell, 5 for strong sell). An improvement in consensus analyst rating indicates that the analysts are getting bullish on the stock. Only stocks with more than five analysts covering them are considered. You can see similar consensus analyst rating changes during the past week in ETW 50 table.
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This story originally appeared on: India Times - Author:Faqs of Insurances
