Jindal Steel shares slip 3% on Q4 earnings; can they cross Rs 700-mark?

Shares of Jindal Steel & Power Ltd fell over 3% today after the metal firm’s consolidated net profit declined 69% to Rs 462 crore in the March 2023 quarter. The large cap stock fell 3.36 per cent to Rs 514.35 against the previous close of Rs 560.20 on BSE. Market cap of Jindal Steel fell to Rs 55,258 crore. JSPL share has lost 6.26 per cent since the beginning of this year and risen 12.51 per cent in one year.

In terms of technicals, the relative strength index (RSI) of Jindal Steel stands at 41.3, signaling the stock is neither oversold nor overbought. The stock has a one-year beta of 1.5, indicating very high volatility during the period. Jindal Steel stock is trading higher than the 200 day moving averages but lower than 5 day, 20 day, 50 day and 100 day moving averages.

A total of 0.68 lakh shares of the firm changed hands amounting to a turnover of Rs 3.68 crore on BSE.

Revenue from operations fell 4% to Rs 13,691 crore against Rs 14,339 crore in the corresponding period of the preceding fiscal. EBITDA slipped 28.76 percent to Rs 2187 crore in Q4 over Rs 3070 crore in the corresponding period in the previous fiscal.

Net profit slipped 44.83% to Rs 3173 crore in the last fiscal against Rs 5753 crore in fiscal 2022. Revenues rose 3.18% in FY23 to Rs 52,711 crore from Rs 51085 crore in FY22. EBITDA fell 35.96% to Rs 9934 crore in Q4 over Rs 15,513 crore in the corresponding period in the previous fiscal. The board has recommended a final dividend of Rs 2 per equity share for financial year (FY) 2022-23.

Motilal Oswal sees a 16% upside in the Jindal Steel stock.

"While there is no guidance for FY24 volumes, the company is seeing strong demand in the domestic market. JSPL expects volumes to pick up in FY24 amid increased government spending before elections next year. We maintain our BUY rating on JSPL with a revised TP of INR 650, based on 5.5x FY24E EV/EBITDA. We believe JSP’s focused approach on leverage, along with capacity expansion, should augur well. The stock is currently trading at 4.9x FY24E EV/EBTIDA," said the financial services firm.

Pravesh Gour, Senior Technical Analyst at Swastika Investmart said , "Jindal Steel & Power has given a false breakout of the triangle formation. It closed below the Rs 600 level. In the last trading session, it broke a neckline support with huge volumes. The overall structure is also showing distortion, as the stock is trading below its key moving averages. The momentum indicator RSI is negatively poised, whereas the MACD is supporting the current strength. On the upside, the Rs 600 level will be an immediate hurdle. On the downside, the Rs 530 level is a strong support level for any bounce back."

Nuvama Institutional Equities has a buy call on the JSPL stock with a target of Rs 737.

"We see short-term hurdles from a fall in realisation and volume. In the long run, JSPL will be structurally leaner via RM integration (coalmines opening in FY24, pellet plant commissioning, slurry pipeline) and better product mix/volume growth. Any major weakness in stock price should be taken as buying opportunity. Retain ‘BUY/SO’," it said.

Also read: Jindal Steel shares slip below Rs 550 on Q4 hit, but price targets hint at up to 39% upside