JTL Industries shares at Rs 286? Here's why analysts are positive after a mixed Q2 results

Multibagger stock JTL Industries extended its gains on Monday and hit its new 52-week high during the session after a strong performance in the period ended on September 30, 2023. The analysts, tracking the stocks, remain largely positive on the counter and see more steam left in the stock.

Analysts believe that the company has posted a mixed set of numbers in the second quarter of the current fiscal, but is likely to outperform in the coming months due to its strong operational performance, increased capex towards technology and output, along with focus to push EBITDA per tonne higher.

Shares of JTL Industries jumped another 2 per cent to Rs 251.65, hitting its new 52-week high on Monday, commanding a total market capitalization of more than Rs 4,200 crore. The scrip had settled at Rs 246.70 in the previous trading session. The stock has gained about 10 per cent in the last three trading sessions.

In the September 2023 quarter, JTL Industries Its net profit grew 34 per cent on a year-on-year (YoY) basis to Rs 27.91 crore, which was Rs 20.90 crore in the year ago period. The company's revenue came in at 502.10 crore in the second quarter of the ongoing fiscal, up 37 per cent YoY.
 
JTL's net profit surged more than 52 per cent to Rs 53.28 crore for the half year ended on September 30, 2023. compared to Rs 32.98 crore in the year ago period. The revenue for the company came in at Rs 1,006.96 in the first half of the ongoing fiscal, up 37 per cent on a YoY basis.

JTL reported good growth in sales volume in Q2FY24 and management expects to achieve sales volume of 3.3 lakh tonnes for the full year FY24. EBITDA per tonne stood at Rs 4,580, almost flat QoQ as the drop in VAP share to 34 per cent of total sales and lower HRC price benchmark more than offset the gain from higher sales volumes, said Axis Securities in its report.

JTL is on its path to enhancing its capacity to 1MT by FY25. Out of the incremental 0.4MT capacity by FY25, 50 per cent of the capacity will be equipped with direct forming technology which will enhance efficiency and capacity utilization. This will also add additional SKUs to the company’s portfolio, it said.

Axis Securities has revised the target price higher to Rs 265 from Rs 235 earlier on a post-bonus basis. "With higher sales volumes and VAP share on the increased capacity ahead, we maintain our 'buy' rating on the stock," added Axis Securities.
 
Shares of JTL Industries have surged about 45 per cent in the last six months, while the stock has rallied more than 55 per cent in the year 2023 so far. It is up 70 per cent in the last one year, while the stock has gained about 3,200 per cent from its Covid-19 lows.

JTL Industries is one of the largest producers of electric resistance welded (ERW) steel pipes in India. Formerly known as JTL Infra, JTL Industries has a capacity to produce more than 6 lakh metric tonnes per annum. It also exports its products to various offshore markets.

JTL Industries is expanding its capacity to 1MTPA by FY25E and 2 MTPA by FY28E; investing in technology, higher value-added share and increased operating efficiency to drive EBITDA/tonne to Rs 5,800 by FY25; exporting to new regions to increase and business to rise with existing partners; and efficient capital allocation to propel return ratios higher, said Nuvama Institutional Equities.

"JTL is present in the fast-growing steel tubes industry and has a diversified range of products. With a PAT CAGR of 63 per cent in FY18–23, the company boasts a robust balance sheet," it added, with keeping JTL Industries 'unrated' for now. However, Antique Stock Broking sees the stock at Rs 286 with a buy rating, suggesting an upside of 16 per cent from its previous close.


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