Shares of JSW Infrastructure Ltd. fell as low as 3.31% in trade on Wednesday following a significant rating downgrade by HSBC Global. According to reports from CNBC TV18, the stock was trading with losses on Wednesday, October 7, breaking a five-day winning streak after the global banking firm downgraded the stock to 'Reduce' from its earlier rating of 'Hold' and set a target price of ₹310. The stock had rallied 27% year-to-date before the downgrade, but HSBC's target implies a 15% downside potential when compared to Tuesday's closing price of ₹363.05. As per CNBC TV18, the stock was trading at ₹358.2 during the session, down 1.4% from previous levels. However, the stock later recovered and was trading little changed at ₹362.95 on the NSE, as compared to a 0.7% decline in the benchmark Nifty index.
As reported by CNBC TV18, HSBC Global downgraded the stock citing concerns that even as the stock has rallied, capital expenditure-led growth can dilute Return on Invested Capital (ROIC) and increase execution risk. The brokerage noted that the rally seen in the stock so far leaves little room for any execution risks in the future. Additionally, resilient India cargoes may have offset Fujairah disruption but slower project ramp-up drives 4-7% cuts to its EBITDA estimates over fiscal 2027 to 2029. According to CNBC TV18, HSBC expects resilient cargo volumes in India to offset the disruption at Fujairah, but said slower project ramp-up is likely to weigh on earnings. The brokerage has cut EBITDA estimates for JSW Infra by 4-7% over Fiscal 2027 and 2029, while it expects overall throughput to capture stronger Jaigarh growth and the Paradip recovery.
According to CNBC TV18, the downgrade implies a nearly 15% downside to the stock's last closing price. The rating change reflects HSBC Global's assessment that while the stock has shown recent gains, the company's growth strategy through capital expenditure may not deliver optimal returns on invested capital. The brokerage's revised target price of ₹310 suggests significant downside potential from current trading levels, with the stock currently trading at ₹358.2 during the session. HSBC remarked that it lacks confidence that ROIC will improve quickly enough to support the current valuation, highlighting concerns about the company's ability to deliver returns on its investment strategy.
Despite HSBC's bearish call, the broader analyst view on JSW Infrastructure remains positive. Among 19 analysts covering the stock, 15 have a 'Buy' rating, one recommends 'Hold', while three carry a 'Sell' rating. The 12-month consensus target price is ₹369.42, implying around 2% upside from current trading price. As per CNBC TV18, instead of JSW Infra, HSBC prefers shares of Adani Ports and Special Economic Zone (ADSEZ), which it rates a 'Buy', citing its superior Return On Invested Capital (RoIC) and valuation. Adani Ports shares were trading 0.5% lower at ₹1,774, having underperformed JSW Infra so far this year, gaining 20% compared to JSW Infra's 27%* year-to-date performance. HSBC noted that ADSEZ offers a clearer path to 15% ROIC by FY29 and trades at 14.5x FY28 EV/EBITDA versus 19.8x for JSWI.
