JTL Industries share rally 4% as company achieves net debt-free status

Shares of JTL Industries rose about 4 per cent during the early trading session on Monday as the company became a term and net debt free entity. The company has repaid the outstanding term debt of about Rs 36 crore to achieve this status, it said in the exchange filing with the bourses.

The company is on track with its capex plan with the initiation of the dispatch and timely delivery of DFT machines in the upcoming weeks before closure of Q4FY24 and commissioning of the same by Q1FY25, said the filing further.

"The commissioning of the DFT plant, we would be able to elevate plant capacity utilization, a testament to our commitment to operational efficiency. JTL will be able to manufacture higher diameter pipes which would increase our kitty by 300+ SKUs of value added product. This strategic move is anticipated to boost our Ebitda margins," the company added.

Following the update, shares of JTL Industries grew 3.6 per cent to Rs 270.95 on Monday, with a total market capitalization of close to Rs 4,500 crore. The stock had settled at Rs 261.55 in the previous trading session. The stock has surged about 800 per cent in the last three years.

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. A fundraising plan will spur growth ahead. It will enhance its SKUs from 1,000 to 4,000 by FY28 with a focus on value-added products, said Axis Securities.

"Post strong Q3FY24 sales volumes, FY24 sales volume to reach 3.5 lakh tonnes, up 45 per cent YoY, ahead of earlier growth guidance. In Q4FY23, the VAP share could bounce back to 40 per cent as the maintenance of the galvanising pot is over. 0.56 MT to 1 MT expansion is on track and will be complete before FY25," it added with a 'buy' rating with a target price of Rs 300.

“Growth is expected to continue in FY24 and onwards, driven by capacity expansion, strong demand from the company’s product, improvement in production quality and expected traction in exports. The operating margin is expected to remain in the range of 7-9 per cent in FY24E and FY25E, on the back of healthy capacity utilization and operational efficiencies, said HDFC Securiites.

JTL Industries, formerly known as JTL Infra, was incorporated in 1991 as Jagan Tubes, a flagship company of Jagan Group. It is a leading ERW steel tube pipes manufacturer. The Chandigarh-based firm ERW black pipes and has also ventured into value-added products such as Galvanized Steel pipes, solar module moun.

The margin is in line with expectation of EBITDA/Tonne likely to sustain in the current range for time-being. Beyond FY25E, once the DFT plant is commissioned this number is likely to increase as the Value added product in the sales mix will increase,” said HDFC Securities.

HDFC Securities also has a fair value target of Rs 300 in a bull case scenario. The brokerage is bullish on the firm on the back of healthy capacity utilization and operational efficiencies. Antique stock Broking also gave it a target price of Rs 296 with a 'buy' rating in its Q3 results review.

JTL Industries had reported a 47.22 per cent rise on a year-on-year basis in consolidated net profit at Rs 30.18 crore in the quarter ended December 31, 2023 against a profit of Rs 20.5 crore in the year ago period. The revenue grew 65 per cent YoY to Rs 568.33 crore.

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