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Jindal Stainless (Hisar) Ltd>
  • CMP : 201.2 Chg : -0.15 (-0.07%)
  • Target : 439.0
  • Target Period : 12 Month

09 May 2022

Healthy performance…

About The Stock

Jindal Stainless (Hisar) (JSHL) is one of the leading players in the Indian stainless steel market.

  • JSHL is the largest specialty stainless steel producer in India with a diversified value-added product portfolio
  • JSHL operates an integrated stainless steel plant at Hisar, Haryana. JSHL has a total melting capacity of 0.8 million tonnes per annum (MTPA)
Q4FY22 Results

JSHL reported a healthy performance in Q4FY22.

  • During Q4FY22, JSHL reported a consolidated topline of  4318 crore, up 39% YoY and 3% QoQ, higher than our estimate of  4032 crore
  • Consolidated EBITDA was at ₹ 605 crore, up 49% YoY, 6% QoQ, higher than our estimate of  572 crore. Consolidated PAT was at  575 crore, up 64% YoY and 12% QoQ, higher than our estimate of  518 crore
What should Investors do?

JSHL’s share price has given a return of ~101% over the last 12 months (from ~ 164 in May 2021 to ~ 329 levels in May 2022)

  • We maintain our BUY rating on the stock
Target Price Valuation

We value JSHL at  439, based on merger ratio

Key Triggers for future price performance
  • With respect to the precision strip division, JSHL has recently commissioned the first phase of expansion wherein the precision strip capacity has been expanded from 22000 tonnes per annum (TPA) to 48000 TPA. Going forward, after the second phase, precision strip capacity would be further expanded to 60000 TPA (from 48000 TPA) which would be completed by Q4FY23. The total capex for both phases is  250 crore. JSHL is also expanding blade steel capacity from current capacity of 14000 TPA to 24000 TPA in two phases at a total capex of  200 crore for both phases. After the first phase, the capacity would be expanded to 20000 TPA and is likely to be completed by Q2FY23 while post the second phase capacity would be expanded to 24000 TPA and be completed by Q2FY24
  • Merger Update - Shareholders and creditors of JSL and JSHL approved the “Scheme of Arrangement” for the merger between two companies on April 24, 2022. The companies will now file the second motion petition with NCLT. The companies now expect other relevant processes to be completed in due time, in the next six to seven months
New Stock Ideas

Apart from JSHL, we also like Jindal Stainless.

  • JSL operates an integrated stainless steel plant at Jajpur, Odisha. The complex has a total stainless steel capacity of 1.1 MTPA
  • BUY with a target price of  225

Key Financial Summary

₹ crore FY19 FY20 FY21 FY22 CAGR in % (FY17-FY22 ) FY23E FY24E CAGR in % (FY22-FY24E)
Total Operating income 10,288.9 9,379.0 9,400.3 15,011.4 14.1 14,586.3 14,094.3 -3.1
EBITDA 1,038.7 935.2 1,127.0 2,153.3 17.0 1,573.4 1,418.9 -18.8
PAT 396.2 400.8 695.6 1,947.3 46.3 1,316.7 1,175.1 -22.3
EPS (₹) 16.8 17.0 29.5 82.5 - 55.8 49.8 -
P/E (x) 19.6 19.4 11.2 4.0 - 5.9 6.6 -
EV/EBITDA (x) 9.7 10.6 8.2 4.4 - 5.5 5.8 -
RoCE (%) 17.6 14.3 18.6 28.1 - 17.7 14.3 -
RoE(%) 20.8 17.5 23.2 39.4 - 21.8 16.9 -
Source: Company, ICICI Direct Research

Variance Analysis- JSHL – Consolidated (Sales volume and EBITDA/tonne is standalone)

  Q4FY22 Q4FY22E Q4FY21 YoY (%) Q3FY22 QoQ (%) Comments
Total Operating Income 4318 4032 3103 39% 4173 3% Consolidated topline came in higher than our estimate
Other Income 32 40 26 23% 30 6%  
Total Operating expense 3714 3460 2697 38% 3604 3%  
EBITDA 605 572 406 49% 569 6% Consolidated EBITDA came in higher than our estimate
EBITDA Margin (%) 14.0 14.2 13.1 93 bps 13.6 37 bps  
Depreciation 61 63 71 -14% 63 -3%  
Interest 39 32 45 -13% 36 9%  
Exceptional item 0 0 17 NA 0 NA  
Share of Net Proft/Loss 174 160 99 75% 146 19%  
PBT 711 677 432 64% 647 10%  
Tax Outgo 136 159 82 66% 132 3%  
PAT 575 518 351 64% 515 12% Consolidated PAT came in higher than our estimate
Key Metrics              
Sales Volume(Standalone) 1,78,784 1,80,000 1,82,474 -2% 1,84,084 -3% Standalone sales volume came in line with our estimate
EBIDTA/Tonne(Standalone) 30,011 29,000 19,952 50% 28,259 6% Standalone EBITDA/tonne came in higher our estimate

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