Multibagger Stock: Domestic brokerage and research firm ICICI Securities Multibagger stock is positive on Jindal Stainless and is seeing further upside. The stock has gained almost 140% this year (Year-to-Date or YTD). The brokerage house has maintained its ‘buy’ recommendation on the metal stock with a target price of ₹250 per share.
The brokerage firm’s note said, “The demand for 400 series stainless steel is increasing in India and the volume share has also increased. The 400 series has a clear cost advantage to JSL, which ultimately makes the 400 series progressively the largest volume contributor.” as shall be transferred,” the note stated.
EBITDA (earnings before interest, tax, depreciation and amortization) has grown through cycles to 18,000-20,000/te from around Rs 13,000/te five years ago. According to the brokerage, cost efficiency measures like better power plant PLF, improvement in coal GCV, work on induction furnace, rail siding have fueled the EBITDA cycle.
ICICI Securities pointed out that lower working capital as well as lower logistics cost and reduced inventory holding/valuation cost as well as lower foreign exchange volatility have also helped EBITDA margins.
JSL is facing changes in the prices of some of its key raw materials. According to ICICI Securities, this aspect could create a scenario of fall in demand if there is volatility in the prices. Volatility in these materials can lead to an increase in inventory which may have some impact on the company’s performance.
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