PL Stock Report: Jindal Stainless (JDSL IN) - Visit Update – Focus on improving efficiencies & volumes - Downgrade to 'Accumulate'

Jindal Stainless (JDSL IN) - Tushar Chaudhari - Research Analyst, Prabhudas Lilladher Pvt Ltd.

Rating: ACCUMULATE | CMP: Rs523 | TP: Rs532

Visit Update – Focus on improving efficiencies & volumes

We visited Jindal Stainless’ (JDSL) Stainless Steel manufacturing complex at Jajpur, Odisha. The recent expansion increased the plant capacity to ~2.2mtpa and JDSL has potential to further increase the capacity to 3.2mtpa at the same premises which is spread over 800 acres. Next phase of 1mtpa brownfield expansion is expected to be announced in coming months which would entail higher capex than earlier phase. The facility is conveniently located in close proximity to raw material sources and ports, which aids in maintaining low logistics and transportation costs. Since FY15, JDSL has consistently ramped up production, completed balance infrastructure and added capacities via debottlenecking & brownfield expansion.

We believe that JDSL to benefit from rising SS demand over next few years led by 1) India’s focus on infrastructure, 2) continuous evolution in new age sectors and 3) overall stronger domestic economy. With 15%+ CAGR in SS volumes over FY23-26E, we expect Revenue/EBITDA/PAT growth of 14%/26%/30% respectively. At CMP, stock is trading at 7.1x/5.8x EV of FY25E/FY26E EBITDA. We downgrade the stock to ‘Accumulate’ from previous ‘Buy’ rating as stock has run up ~30% from our recent initiating report. JDSL has delivered robust operating performance in the rising raw material scenario over last two years. We expect stock to trade at higher multiples if company delivers similar performance in current falling raw material pricing scenario over next few quarters; on consistency of EBITDA per ton compared to its peers in carbon steel. Accumulate with TP of Rs532 (earlier Rs543) valuing at 6.5x EV of Sept 2025E EBITDA.

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