Target: ₹940
CMP: ₹782.90
In-line with India’s finished stainless steel (SS) production growth trajectory, the volume of Jindal Stainless (JDSL) is likely to rise 9 per cent year on year in FY26e, moderate to about 6 per cent in FY27e and rebound to >10 per cent in FY28e, depicting a ‘V-shaped’ growth trajectory over FY26-28e. Commissioning of downstream facilities at Jajpur in H2-FY27 is likely to temporarily mute volume in FY27, due to transition and ramp-up timelines. However, once the downstream VAP units stabilise, aided by incremental volume from Indonesia, we expect volume to rise to about 3 million tonne in FY28e.
Recent 8 per cent uptick in domestic SS prices and price hike by marquee global and domestic players augur well for realisation and profitability in Q4FY26e. Further, as the downstream facility ramps up to rated capacity, JDSL’s profitability is likely to improve structurally, aiding margin expansion. We expect EBITDA to clock about 12.7 per cent CAGR over FY26-28e.
Robust domestic demand and strong volume trajectory in FY28 are likely to aid profitability. Given the sector’s re-rating over the past few years and improving earnings visibility, we maintain BUY rating on the stock with an upwardly revised TP of ₹940 (from ₹900 earlier), valuing it at 10.5x FY28e EV/EBITDA (median of its five-year one-year rolling average plus +1SD).
Key risks: Further extension of QCO; extension in capex-timeline; slower ramp-up of downstream (CRAP) unit; and volatility in key RM prices