ICICI Securities has given Buy recommendation for Jindal Stainless recommended buy rating on the stock with a target price of Rs 250 in its research with a target price of Rs. 250 in its research report issued on Dec 21, 2021
ICICI Securities research report on Jindal Stainless
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). With ~1mtpa volume expansion underway, we see progressive deleveraging/FCF generation, improvement in consolidated RoCEs (because of significantly lower capex intensity) and improvement in valuation multiples which a converter business model deserves. NCLT approval for merger of JSL and JSHL is awaited.
Outlook
We maintain BUY. We present the key takeaways from our recent management interactions in this report.