Share price of this large-cap stock and India’s leading stainless steel manufacturer jumped 4.7 percent on BSE to hit an intraday high at Rs. 739.4 in the trading session of Thursday, after the Board of the company approved Rs. 5,390 crore investments of major expansion and acquisition plans.
With a market capitalisation of Rs. 60,320.7 crore, the stock moved up by 3.63 percent and closed in the green at Rs. 732.55, compared to its previous closing price of Rs. 706.9.
According to the latest regulatory filings in the stock exchanges, Jindal Stainless announced major expansion and acquisition plans to augment its melting and downstream capacities, to become one of the largest stainless steel producers in the world.
The company reported a three-pronged investment plan valued at nearly Rs. 5,400 crore with the goal of becoming a global leader in stainless steel.
Firstly, the company will purchase 100 percent stake of Sulawesi Nickel Processing Industries Holdings Pte. Ltd. (SNPIHPL), Singapore, for developing and operating a stainless steel melt shop (SMS) in Indonesia. Following the acquisition, SNPIHPL will become the wholly-owned subsidiary of Jindal Stainless.
SNPIHPL will form a joint venture (JV) by acquiring a 49 percent equity stake in Indonesia-based operating company, and once operational, the annual production capacity of the SMS would be 1.2 million tonnes per annum (MTPA).
This will increase the company’s melting capacity by more than 40 percent from 3 MTPA to 4.2 MTPA at an investment of ~Rs. 715 crore. The SMS is expected to commence operations within 24 months.
Secondly, an investment of up to Rs. 3,350 crore is required, of which Rs. 1,900 crore of capital expenditure is towards downstream capacity expansion at the company’s Jajpur Plant and another Rs. 1,450 crore is needed for the upgrading of infrastructural facilities, such as railway siding, sustainability initiatives, and renewable energy generation.
Lastly, the company will acquire a 54 percent equity stake in Chromeni Steels Private Limited (CSPL), through the acquisition of a 100 percent equity stake of Evergreat International Investment Pte. Ltd. (EIPL), Singapore.
EIPL was incorporated in Singapore in 2017 and CSPL owns a 0.6 MTPA cold
rolling mill located in Mundra, Gujarat. Following the acquisition, CSPL will become the company’s step-down subsidiary.
The transactions entail an outlay of around Rs. 1,340 crore, comprising a takeover of existing debt of nearly Rs. 1,295 crore and a balance of ~Rs. 45 crore towards the equity purchase of CSPL.
In terms of financials, the company’s revenue from operations grew by 0.71 percent from Rs. 9,062 crore in Q3 FY22-23 to Rs. 9,127 crore in Q3 FY23-24, accompanied by an increase in net profit of 34.7 percent from Rs. 513 crore in Q3 FY22-23 to Rs. 691 crore in Q3 FY23-24.
The stock has delivered nearly 156.8 percent of multibagger returns in the last one year and around 65.8 percent of positive returns in the last six months. So far in 2024, the company has given 27.8 percent of positive returns.
Founded in 1970, Jindal Stainless Limited is India’s leading stainless steel manufacturer and is engaged in the manufacturing of stainless steel flat products in Austenitic, Ferritic, Martensitic and Duplex grades.
The company’s product range includes ferro alloys, stainless steel slabs, hot rolled coils, plates and sheets, and cold rolled coils and sheets.
Written by Shivani Singh
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