What makes Jindal Steel & Power a perfect pick to ride steel commodity bull run? Analyst sees 40% upside in this metal stock
A day after touching 52-week high on Monday, shares of Jindal Steel corrected nearly 5% in the afternoon trade on Tuesday amid volatility in the market.
A day after touching 52-week high on Monday, shares of Jindal Steel corrected nearly 5% in the afternoon trade on Tuesday amid volatility in the market. Metal stocks have been surging due to supply crisis and rising demand in view of Russia Ukraine crisis. Against over 6% return in Nifty Metal, Jindal Steel share price has gone up by nearly 20% in the past one month. Besides, shares of this metal and power stock gained 38% in one year and whooping over 500% in the past two years.
Though the scrip was trading lower and was seen under pressure on Tuesday, brokerage house and analyst remain bullish on Jindal Steel and Power.
Santosh Meena, Head of Research, Swastika Investmart Ltd, believes that Jindal Steel & Power can be a good stock to ride the steel commodity bull run. There is good growth visibility, the company has the lowest Net Debt to Equity ratio in the industry, backward integration and capacity expansion make this company a good buy at current market price, said Meena
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"There has been a shortage of Steel post-pandemic, which skyrocketed the steel prices due to supply chain disruptions; this has been further exacerbated by Ukraine War. This will ensure that steel prices are going to stay elevated in the medium term, thus improving the profitability of steel companies," said Meena.
He is of the view that domestic steel companies are well-positioned to benefit from multi-year high prices due to structural advantages, as they operate at the lower end of the global cost curve due to lower labor and iron ore costs compared to other countries.
"China is on a serious path of decarbonization and focusing on reducing steel production & exports, providing a good impetus to participate in the rising global export opportunity to domestic companies, another point to note is that Indian steel demand is poised to grow due to the revival of infrastructure, construction and manufacturing sector, thus leading to a new economic and commodity growth cycle for India," he said.
He sees an upside of nearly 40% in this stock against Tuesday's lower price of Rs 545.60 per share on the BSE.
"Jindal Steel is in strong bullish momentum and it is continuing this momentum followed by a breakout of the bullish flag formation that may lead the stock to move towards 750-770 levels in the next couple of months however 660 will be an intermediate hurdle. On the downside, 540 will act as an immediate and strong support level while the breakout level of 500 is a sacrosanct support mark," said the expert.
Brokerage House Edelweiss was too bullish on Jindal Steel & Power (JSPL) after it won Utkal B1 and B2 blocks in the ongoing commercial coal block auctions. "We see a significant advantage for the company in the medium term. In our view, the twin Utkal B blocks and previously won Utkal C block are likely to secure coal self-sufficiency for the Angul plant for not only the current capacity, but for the upcoming 2.7mtpa DRI facility as well. We maintain ‘BUY’ on JSPL with TP of Rs 637, " Edelweiss has motioned in its report on April2.
Earlier, stating valuation and EV/EBITDA estimates for FY23/24 remain comfortable, brokerage house Motilal Oswal had maintained BUY with revised TP of Rs 605.
Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision
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