JTL Industries shares climbed 764% in three years; what’s next?

Shares of multibagger JTL Industries Ltd have delivered 764% returns in three years. In comparison, Sensex has zoomed 47.93% in three years. BSE small cap, its parent index zoomed 122% during the period. The metal stock hit a yearly low of Rs 142.75 on March 28, 2023.

JTL Industries shares ended flat at Rs 259.10 on Friday against the previous close of Rs 259.80 on BSE. Market cap of the firm stood at Rs 4433.56 crore. A total of 0.77 lakh shares of the firm changed hands amounting to a turnover of Rs 2 crore on BSE. 

Axis Securities has a target of Rs 300 for the metal stock. The company has stable operating profits and returns during the expansion phase

“JTL is strategically planning to expand its capacity from the current 0.586 MT to 1 MT by FY25. Additionally, the company aims to boost its value-added product (VAP) share from 31% in FY23 to 50% by FY25. Looking further ahead, JTL plans to add another 1 MT capacity post FY25, which will raise its total capacity to 2 MT by FY27. The company has stable operating profits and returns during the expansion phase. With the volume expansion Capex going on, the company’s ROE and ROCE are expected to moderate but would remain decent near 20% over FY24-26E (APL Apollo’s ROE/ROCE stood at 23.5%/29.2%). The company has wide distribution reach through strategically located plants,” said Axis  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.

“On-going 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% in FY24E and FY25E, on the back of healthy capacity utilization and operational efficiencies. 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.

“We believe investors can buy the stock in Rs 252.85- 260.55 band (23.5x FY25E EPS, 16.7x FY25E EV/EBITDA) and add on dips to Rs 228.70-235.70 band (21.25x FY25E EPS, 15.1x FY25E EV/EBITDA) for base case target of Rs 278.75 (25.51x FY25E EPS, 18.2x FY25E EV/EBITDA) and bull case target of Rs 300.5 (27.5x FY25E EPS, 19.6x FY25E EV/EBITDA) for the next 2-3 quarters,” added the brokerage.

In terms of technicals, the relative strength index (RSI) of the JTL Industries stock stands at 53, signaling it's trading neither in the overbought not in the oversold zone. JTL Industries shares stand higher than the 10 day, 50 day, 100 day, 150 day, 200 day but lower than the 20 day moving averages. The maker of iron and steel products logged a stellar rally of 116% in two years on BSE.

The firm reported a 47.22 per cent rise 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. On a sequential basis, profit climbed 8 per cent from Rs 27.91 crore in September 2023 quarter.

JTL Industries Limited is a producer of electric resistance welded (ERW) steel pipes including pipe and tube manufacturers in India. The company produces black and galvanized ERW steel pipes and tubes, hollow sections and structural steel that are used in engineering and construction projects. Its product includes galvanized steel tubes and pipes, scaffolding fittings and systems, hollow sections, LTZ sections, and mild steels angles/channels. Its services include solar solutions, logistic services, and packaging and loading services.