Jindal Steel shares closed above Rs 700 mark for fourth straight session; what’s next?

Multibagger stock: Shares of Jindal Steel have surged 82% from their 52-week low. The Jindal Steel stock fell to a 52-week low of Rs 386.15 on September 27, 2022.

SUMMARY

• In terms of technicals, the relative strength index (RSI) of Jindal Steel stands at 62.9, signaling the stock is neither oversold nor overbought.
• The stock has a one-year beta of 1.4, indicating very high volatility during the period.
• In the last three years, the JSPL stock has rallied 233%. The stock has gained just 18% in 2023 and risen 61% in a year.

Shares of Jindal Steel & Power Ltd (JSPL) closed above the Rs 700 mark for the fourth consecutive session on Wednesday. The stock, which hit a 52-week high of Rs 716.15 on September 5, 2023, ended at Rs 702 on Wednesday on BSE.

The Jindal Steel stock has ended above the Rs 700 mark for four sessions after nearly 13 years. The stock ended above the key level last in December 2010.

Meanwhile, the Jindal Steel stock has surged 82% from its 52-week low. The Jindal Steel stock fell to a 52-week low of Rs 386.15 on September 27, 2022. In the previous session, Jindal Steel stock ended 1.52% lower at Rs 702 against the previous close of Rs 712.85 on BSE. Market cap of Jindal Steel fell to Rs 71,610 crore. A total of 0.81 lakh shares of the firm changed hands amounting to a turnover of Rs 5.65 crore on BSE.

In terms of technicals, the relative strength index (RSI) of Jindal Steel stands at 62.9, signaling the stock is neither oversold nor overbought. The stock has a one-year beta of 1.4, indicating very high volatility during the period. Jindal Steel stock is trading higher than the 5 day, 10 day, 20 day, 50 day, 100 day and 200 day moving averages.

In the last three years, the JSPL stock has rallied 233%. The stock has gained just 18% in 2023 and risen 61% in a year.

Here’s a look at what an analyst and brokerages said on the outlook of the stock.

Aditya Gaggar, Director of Progressive Shares said, “Jindal Steel and Power is in the primary uptrend with a higher top higher bottom formation and in the month of July 2023, the stock has given a breakout from the Flag and Pole formation (Monthly Time-frame). The stock moved in tandem with the market correction and has almost completed its pullback move to resume its uptrend. A reading of 30 in the trend-following indicator ADX indicates the presence of a strong uptrend. As per Flag and Pole formation, the target is Rs 825”

Kotak Institutional Equities (KIE) has raised target price of Jindal Steel to Rs 740 from Rs 580.

“A sector-leading growth profile along with the strongest balance sheet makes a strong case for re-rating,” the brokerage firm said.

Kotak sees the next 12 months as a transformational period for JSPL as various projects are lined up for commissioning. JSPL’s capacity would increase by 65 per cent in two phases while higher backward and forward integration over FY2024-26E would structurally lift its margin profile.

“We estimate EBITDA and EPS CAGR of 19 per cent and 17 per cent and 33 per cent and 27 per cent over the next 3 and 5 years, respectively. A large part of growth capex should be met by internal accruals with net debt/EBITDA to peak at 0.8 times in FY2025E. A sector-leading growth profile along with the strongest balance sheet makes a strong case for re-rating,” it said.

Brokerage Prabhudas Lilladher has assigned a buy call to the power sector stock.

“We initiate coverage on Jindal Steel & Power (JSP IN) with a ‘BUY’ rating and target price of Rs812 assigning 6x EV to FY25E EBITDA. We believe JSP is well poised to take dual benefit of strong volume growth and improvement in product mix over FY23-25E given a) strong 16% CAGR in steel volumes owing to ongoing Angul capacity expansion; b) commissioning of 5.5mtpa Hot Strip Mill (HSM) to improve product mix and increase Flat Products share from c.33% to over 60%; and c) its upcoming 12mtpa pellet plant, 18mtpa slurry pipeline and four coal blocks to aid margins. With GoI’s focus on infrastructure and relatively stronger domestic economy, steel demand is expected to remain high in next few years supporting JSP’s volume growth and drive earnings growth. We expect Revenue/EBIDTA/PAT CAGR of 12%/16%/24% over FY23-25E. The stock is currently tradng at 6.4x/5x EV of FY24E/FY25E EBITDA. Initiate ‘Buy’.”

Consolidated profit slipped to Rs 1692 crore in the three months ended June 30 from Rs 1990 crore a year earlier. Revenue slipped to Rs 12,643 crore in Q1 of this fiscal against Rs 13,069 crore in the June quarter of last fiscal. Operating profit or EBITDA slipped to Rs 2628 crore in the June 2023 quarter against Rs 3438 crore in Q1 the previous fiscal.

With Thanks Reference to: https://www.businesstoday.in/markets/company-stock/story/jindal-steel-power-shares-rise-buy-sell-or-hold-397245-2023-09-07