JTL Industries shares rise amid fundraising, capex plans; check analyst views & target price

JTL Industries Ltd, despite the multibagger returns in the last few years, has been hogging investors' attention at Dalal Street lately. The company has been riding the rally amid its capacity expansions plans and fundraising process, keeping the confidence of analyst firms in the company.

Earlier this week, the company board approved and allotted 2,40,300 fully paid up equity shares with a face value of Rs 2 each, in pursuant to conversion of warrants into equity shares to allottees, belonging to non-promoter and public category, upon receipt of balance 75 per cent of the issue price that it about Rs 7.21 crore, said the company in the exchange filing.

Prior to this, JTL Industries announced plans to establish a mega capacity augmentation project in Maharashtra through its wholly owned subsidiary JTL Tubes Limited, said the company in another exchange filing. The strategic move serves as a testament to the company's vision for expansion and diversification, it said.

To finance this ambitious project, JTL is set to raise Rs 1,310 crore through various routes, including but not limited to qualified institutional placement (QIP). This infusion of funds will be orchestrated from both promoter and non-promoter groups, added the filing.

Shares of JTL Industries climbed about 3 per cent to Rs 243.90 on Friday, commanding a total market capitalization of close to Rs 4,100 crore. The scrip has gained about 8 per cent in the last two trading sessions. However, it is slightly below its 52-week high of Rs 252.75 apiece, hit on December 19, 2023.

JTL Industries, formerly known as JTL Infra, was incorporated in 1991 as Jagan Tubes, a flagship company of Jagan Group. Promoted by the Chandigarh-based Singla family, JTL manufactures is a leading ERW steel tube pipes manufacturer, ERW black pipes and has also ventured into value-added products.

Management is targeting 30 per cent YoY sales volume growth in FY24 and product mix improvement, to eventually reach 50 per cent contribution from higher-margin value added products by FY25, said analysts tracking the stock. With most of its aggressive expansions being funded through internal accruals, leverage levels would remain low, translating to good financial prudence.

JTL Industries recently announced plans to raise Rs 1,310 crore to fund a mega expansion project in Maharashtra, which would propel it to become one of the key steel pipe makers in India. This would enable it to be able to cater to the huge demand upsurge in the Indian structural tube market, said Antique Stock Broking.

"Their current total installed capacity stands at 586 ktpa with a strong network of 800 distributors and retailers and 1,000+ SKUs. It had earlier raised Rs 340 crore through fully convertible warrants to fund its expansion to reach 750 ktpa by FY24 end and 1 mtpa by FY25. We like the company’s growth prospects and maintain 'buy' and arrive at a target price Rs 286," it added.

With the phase-wise volume expansion in progress, we model revenue, Ebitda, PAT CAGR of 46 per cent, 45 per cent and 51 per cent over FY23-25E, respectively, said Axis Securities. "We maintain our 'buy' rating on the stock and arrive at a target price of Rs 265 per cent share," it added citing delay in execution of expansion projects and volatility in steel raw material prices as the key risks.

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