Buy Jindal Steel & Power, target price Rs 522: Investec

Investec has buy a call on Jindal Steel & Power (JSPL) with a target price of Rs 522. The current market price of Jindal Steel & Power is Rs 447.2.

Jindal Steel & Power Ltd, incorporated in the year 1979, is a Mid Cap company with a market cap of Rs 45023.50 Crore, operating in Metals-Ferrous sector.

Jindal Steel & Power's key Products/Revenue Segments include Iron & Steel Items, Other Operating Revenue, Export Incentives and Scrap for the year ending 31-Mar-2020.


Investment Rationale
Investec estimates JSPL’s net debt to reduce by Rs 130 billion over FY21E-23E to Rs 112 billion, driven by strong cash flows. Investec has not factored in JPL’s (Jindal Power) divestment in its estimates. It expects JSPL to re-rate and value the stock at 5.5x FY22E EV/EBITDA (earlier 5x) to arrive at a target price of Rs 539/share.

Financials
For the quarter ended 31-12-2020, the company has reported a Consolidated Total Income of Rs 10898.70 Crore, up 19.28 per cent from last quarter's Total Income of Rs 9137.43 Crore and up 17.19 per cent from last year same quarter's Total Income of Rs 9299.82 Crore. Company has reported net profit after tax of Rs 2566.68 Crore in Dec quarter.