A leading steel & power manufacturing firm, renowned for its robust production capabilities and market presence, is drawing significant attention from investors. Recent analyst reports suggest a compelling 49% upside potential, backed by expectations of higher steel prices in FY25, strong volume growth projections, and the company’s notably low leverage position in the ferrous sector. Let’s dive into the specifics.
Share Price Movement
The share price of Jindal Steel and Power Limited went up 2.4 percent to Rs. 827.10 per share on Tuesday, an increase from its previous close of Rs. 807.70 per share. The market capitalisation now stands at approximately Rs. 82,448 crore as of February 04, 2025.
Target By DAM Capital
DAM Capital recommends buying Jindal Steel and Power with a target price of Rs. 1,210, an upside of 49%, highlighting that the risk-reward ratio is extremely favorable. It is their top pick in the ferrous space due to the highest volume growth and lowest leverage. DAM Capital expects steel prices to be higher in FY25, noting that current prices in China are unsustainable and anticipating supply discipline.
Q3 Financial Highlights
In Q3FY25, the revenue was Rs. 11,751 crore, showing a 4.8% increase QoQ from Rs. 11,213 crore in Q2 FY25 and a marginal 0.43% growth YoY from Rs. 11,701 crore in Q3FY24. However, profit decreased significantly, dropping 50.7% YoY from Rs. 1,928 crore in Q3FY24 to Rs. 951 crore in Q3FY25, though it saw a 10.6% increase QoQ from Rs. 860 crore in Q2FY25.
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Competitors
Jindal Steel and Power competes with Tata Steel, JSW Steel, SAIL, Monnet Ispat & Energy, ArcelorMittal, and Pennar Industries. These companies are key players in the steel and power sectors.
Jindal Steel and Power is currently trading at a P/E of 20.26, which is above the industry P/E of 17.34.
Market Outlook
India’s power sector is set for a significant transformation, with an estimated Rs 42 trillion in investments planned over the next decade. This massive infusion of funds aims to modernise ageing infrastructure, meet the country’s rapidly growing energy demand, and advance its renewable energy targets. Power demand is expected to surge, driven by the rise of electric vehicles and the expansion of data centers. To keep pace, India plans to add 250 GW of new power capacity, with a strong focus on renewables and energy storage, alongside substantial investments in infrastructure.
Meanwhile, the steel industry is grappling with challenges stemming from China’s strategy of selling steel at a loss to maintain its global dominance. This has put Indian steelmakers under pressure, resulting in lower prices and shrinking profit margins. As India shifts to becoming a net importer of steel, Chinese imports have surged, further squeezing domestic producers and intensifying competition in the market.
Written By Fazal Ul Vahab C H
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