Domestic brokerage firm Axis Securities continues to remain positive on JTL Industries after Q3 earnings. The company had reported a mixed set of numbers in the December 2023 quarter on Friday but the brokerage believes that outlook for the sector continues to be positive and increased sales with capacity expansion plans bodes well for the company. The brokerage said that revenue was better than its estimates, while Ebitda was in-line for JTL Industries, while it missed estimates on the profit front. The domestic brokerage firm sees another 20 per cent upside potential in the stock from current levels. Shares of JTL Industries gave up its early gains on Tuesday, trading 2 per cent lower at Rs 248.70 on Tuesday, commanding a total market capitalization close to Rs 4,250 crore. The stock has rallied about 2,000 per cent in the last four years, while it has gained about 80 per cent from its 52-week lows. JTL Industries reported a 47.22 per cent rise in the consolidated net profit on a year-on-year (YoY) basis at Rs 30.18 crore in the quarter ended on December 31, 2023. Its consolidated revenue from operations increased 65.26 per cent YoY to Rs 567.39 crore in the third quarter of the ongoing financial year. EBITDA for the December 2023 quarter came in at Rs 42.51 crore, up 46.35 per cent YoY from Rs 29.04 crore in the December 2022 quarter. EBITDA margins improved 97 basis points during the quarter under review. Also, JTL Industries will be raising funds to augment its manufacturing capacity in Maharashtra. JTL’s capacity expansion gets impetus post the company’s announcement in December 2023 to raise Rs 1,310 crore to enhance the capacity to 2 MTPA by the end of FY27. The capacity will reach 2MT by the end of FY27 and full utilisation, said Axis Securities. The expansion plan from 0.56 MTPA to 1 MTPA is on track and will be completed by FY25, it said. "JTL will enhance its SKUs from 1,000 to 4,000 by FY28 with a focus on value-added products. This will translate to 60 per cent VAP share by FY28 as against 31 per cent as of 9MFY24. The newer VAP products will have EBITDA per ton of Rs 9,000-11,000, against the general products at Rs 2,000-2,500, which will drive the blended EBITDA per ton to Rs 7,500 per ton by FY28," it added. For the nine month ended on December 31, 2023, JTL Industries reported a 56.11 per cent growth in the consolidated net profit at Rs 83.49 crore from Rs 53.48 crore in the same period a year ago. Revenue from operations on a consolidated basis jumped over 46 per cent to Rs 1,574.29 crore in the 9MFY24. Post strong Q3FY24 sales volumes, FY24 sales volume to reach 3.5 lakh tonnes, up 45 per cent YoY, ahead of earlier growth guidance of 30 per cent YoY. In Q4FY23, the VAP share could bounce back to 40 per cent from 20 per cent in Q3FY24, as the maintenance of the galvanising pot is over, said Axis, which has buy rating on the stock with a target price of Rs 300 on it. Incorporated in 1991, JTL Industries is a fast-growing dynamic steel tube manufacturing company, which specializes in producing ERW Black Pipes, pre galvanized & galvanized steel pipes, large diameter steel tubes & pipes, and hollow structures. It manufactures pipes with diameters spanning from 0.5 inches to 10 inches.
Another brokerage firm Antique Stock Broking prefers steel pipe companies (especially structural tube) as they play on infrastructure push. JTL Industries is among the preferred picks of the brokerage firm, which has a 'buy' rating on the stock with a target price of Rs 305.
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