Motilal Oswal has given Buy recommendation for Jindal Steel and Power recommended buy rating on the stock with a target price of Rs 495 in its research r with a target price of Rs. 495 in its research report issued on Aug 11, 2021
Motilal Oswal’s research report on Jindal Steel and Power
JSP’s 1QFY22 result was strong as expected, with the highest ever EBITDA/t of INR28,098/t (7% above our estimate). However, standalone EBITDA fell 7% QoQ to INR45.3b due to a 16% QoQ decline in volume. Adjusted for the JPL divestment, net debt fell only 4% QoQ to INR152b due to an increase in working capital. We raise our FY22E EBITDA by 13% on expectations of higher steel prices in the fiscal. Strong cash flows, coupled with cash proceeds of INR30.1b from the JPL divestment, should lead to a fall in net debt to INR34.5b by FY23E, implying 0.3x FY23E EBITDA. We reiterate our Buy rating.
Our TP of INR495/share is based on 5x FY23E EV/EBITDA. At the CMP, the stock trades at an attractive 4.5x FY23E EV/EBITDA.