Shares of stainless steel producer Jindal Stainless have zoomed 118% or Rs 149 since August 19, 2022. Shares of Jindal Stainless hit an all-time high of Rs 275 on BSE in early trade today. The stock has gained 40.16% in a year and risen 12.44% in 2023. Total 0.43 lakh shares of the firm changed hands amounting to a turnover of Rs 1.16 crore on BSE. Market cap of Jindal Stainless stood at Rs 14,075 crore. Later, Jindal Stainless stock fell after four days of gain today. In the afternoon trade, Jindal Stainless stock fell 1.59% to Rs 268.90 on BSE. It closed 1.90% or Rs 5.10 higher at Rs 272.95 in the previous session.
Jindal Stainless shares have outperformed their peers in the last six months. While JSW Steel stock has gained 8.90%, shares of Steel Authority of India have climbed 8.70% in the last six months. Other peers such as Tata Steel, Hindalco Industries and NMDC rose 6.14%, 3.05% and 2.80% respectively during the period.
In terms of technicals, the relative strength index (RSI) of Jindal Stainless stands at 72.2, signaling it’s trading in the overbought. Jindal Stainless stock has a one-year beta of 1.2, indicating high volatility during the period. Jindal Stainless shares are trading higher than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages.
Jindal Stainless reported a 28% fall in net profit to Rs 314 crore ($38.58 million) for the third quarter ended December 31 from Rs 435 crore a year earlier.
However, the New Delhi-based company’s revenue from operations climbed 12% to Rs 6,350 crore in Q3 from Rs 5,670 crore a year earlier.
Exports fell to nearly 5% in the December quarter following the government’s decision to introduce an export tax on certain steel intermediaries in May.
Earnings before interest, taxes, depreciation, and amortisation (EBITDA) fell 34.14% to Rs 524.79 crore in Q3 against Rs 796.82 crore in the December quarter of the previous fiscal.
Here’s a look at what analysts said on the outlook of the stock.
Abhijeet from Tips2trade said, “Jindal Stainless has a strong resistance at Rs 269 on the Daily charts. Investors should book profits at current levels and wait for lower support levels of Rs 218- Rs 230 to initiate fresh buy positions.”
Sumeet Bagadia, Executive Director, Choice Broking said, “From July 2022, the stock has been creating higher highs and higher lows constantly on the monthly charts. JSL has a good base between Rs 250-255 levels. The stock has been trading above the 20, 50, and 200 Day EMA levels consistently, demonstrating the stock’s strength. We can see strength on the weekly charts as well, and the stock was able to close above the key support level of Rs 255, which is also a 20 Day EMA. The stock can continue to rise towards levels of Rs 290-300 once it has crossed the minor resistance of Rs 272 levels. On Daily charts, the stock has been into a smaller range and hence we can witness a squeeze of a Bollinger band with price trading above middle band of the Bollinger band indicating that the expansion of Bollinger band would help stock to move on the higher side. Based on the above analysis, we recommend buying Jindal Stainless at current of Rs 264 and can be accumulated up to Rs 258 levels for the target of Rs 290. If the price closes below Rs 250, our analysis will be regarded as being invalid.”
Nuvama has assigned a target of Rs 331 for the steel sector stock. Nuvama said it visited Jindal Stainless’ Jajpur, Odisha plant, and that its earnings growth confidence is now stronger. Nuvama said it visualised that the 1mtpa stainless steel expansion is geared to start commercial production from March 2023-end, providing volume growth until FY25. The optionality of capacity growth at low capex exists, keeping return ratios high, it said.
With in-principal approval of NCLT regarding merger with Jindal Stainless Hisar (JSHL), Nuvama expects merger by FY23-end, making JDSL among top-10 stainless steel producers in the world with an installed capacity of 2.9mtpa.
“We now consider JSHL too with NCLT’s nod for the merger. With this, we raise our EV/Ebitda multiple to 6 times (earlier 5.5 times) to give due credit to the market leader of stainless steel , high earning growth (31 per cent profit CAGR during FY23-25E) and a strong balance sheet (FY24E net debt/Ebitda of 0.8 times). Also, we rollover and take the average of FY24E/FY25E earnings to arrive at a target of Rs 331 from Rs 260 earlier,” it said.
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