JTL Industries shares: Brokerages remain positive on the stock after a 2,700% rise from Covid lows

JTL Industries shares have delivered a whopping 2,700 per cent return since the Covid-19. Even after this stellar rise in the counter, select brokerage firms continue to remain positive on the stock. They see the stock is likely to rise 30 per cent from its previous close on Friday.

Shares of JTL Industries have been on a roll recently. The stock extended its gains on Monday to hit its new 52-week highs at Rs 404, commanding a total market capitalization close to Rs 3,500 crore. The scrip had settled at Rs 398.20 in the previous trading session on Friday.

Shares of JTL Industries have gained about 118 per cent from its 52-week lows at Rs 185.70 in September 2022, while the stock has more than tripled in the last two years. Interestingly, the stock has gained as much as 2,700 per cent from its Covid-19 lows at Rs 14.5 in March 2022.

For the quarter ended on June 30, 2023, JTL Industries reported a more than double net profit to Rs 25.37 crore. The company had posted a net profit of Rs 12.07 crore in the same quarter previous year. The total revenue from the operations increased 38 per cent to Rs 504.80 crore in Q1FY24, from Rs 368.04 crore in the same quarter previous year.

JTL Industries’ sales volume came in at 77.3 KT, sharply higher by 52.5 per cent YoY but declined 3.5 per cent QoQ impacted sequentially by lower exports and domestic deliveries. EBITDA at Rs 35.5 crore was below estimate, but materially improved 131 per cent YoY and fell 32.7 per cent sequentially, said Antique Stock Broking in its report.

"Blended realization at Rs 65,269 per ton was 10.1 per cent lower YoY but improved 10.7 per cent sequentially. EBITDA per ton came in at Rs 4,594, higher 51.5 per cent YoY. The company’s continued capacity expansion is on track to reach 750 ktpa by FY24 end and 1 mtpa by FY25. Improved product mix, stable steel prices, and higher sales volume will enhance profitability and EBITDA margin," it added with a buy rating on the stock with a target price of Rs 511

The company board recently approved the issue of bonus shares in the ratio of 1:1, which means every shareholder of the company will get one share for each share held by them as on the record date, which shall be intimated later.

Steel prices are expected to remain stable in H2FY24 which reduces the probability of inventory losses in H2FY24. The management has reassured that its 1 million tonnes capacity expansion is on track and will be completed by the end of FY25. By the end of FY24, capacity will grow to 0.75 million tonnes. VAP's share target is to reach 50 per cent by FY25, said Axis Securities.

"Guidance for sales volume baseline growth for FY24 is 30-35 per cent on a YoY basis. However, the target is to achieve a sales volume of 0.35+ million tonnes in FY24, which translates into 50 per cent growth YoY.  With higher sales volumes and VAP share on the increased capacity ahead, we maintain our 'buy' rating on the stock," it said with a target price of Rs 470 on the stock.

JTL Industries, formerly known as JTL Infra, is the largest producer of electric resistance welded (ERW) steel pipes in India, with a capacity to produce more than 6 lakh metric tons per annum. The company also exports its products to various offshore markets.

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