Jindal Steel & Power share price rose almost seven per cent in intraday trade on Monday after brokerage firm Kotak Institutional Equities upgraded the stock to a 'buy' from a 'reduce' and increased its target price to ₹740, implying a 36% upside from the stock's previous close of ₹544.90.
The brokerage firm said it sees the next 12 months as a transformational period for the stock as various projects are lined up for commissioning.
Kotak pointed out that Jindal Steel & Power’s expansion projects totalling about ₹24,000 crore, announced in May 2021, are set to commission gradually starting Q2FY24E and aid earnings from the second half of FY24E.
The brokerage firm believes Jindal Steel has the potential to elevate its product profile closer to JSW Tata and could announce further downstream capex.
"We estimate capex of ₹27,000 crore over FY2024-26E, ₹6,000-7,000 crore higher than its announced capex plan. We expect the ongoing expansion projects to start earning contributions from the second half of FY24. Despite a step-up in growth capex, internal accruals should keep net debt/EBITDA less than one time over FY2024-26E with a peak at 0.8 times in FY2025E," said Kotak.
