Goldman Sachs has initiated coverage on Jindal Stainless Ltd. with a 'Buy' rating and a Street-high price target of ₹1,000 per share. According to reports from CNBC TV18, the target price implies an upside potential of around 35% from the current market price of around ₹742, making it the highest among brokerages tracking the stock. Shares of Jindal Stainless gained over 2% in early trade on Tuesday, July 21, following the brokerage's positive recommendation. The stock was quoting at ₹751.10, up ₹19.85, or 2.71% during Tuesday's trading session, as reported by latest market data.
Goldman Sachs expects Jindal Stainless to strengthen its global position through strategic capacity expansion initiatives. As reported by CNBC TV18, following the ramp-up of its 1.2 mtpa stainless steel plant in Indonesia, a joint venture with China's Tsingshan Group, and the proposed 4 mtpa greenfield project in Maharashtra, the company is expected to control 8.2 mtpa of stainless steel melt capacity. This expansion would make Jindal Stainless the second-largest stainless steel producer globally. The company's current capacity expansion strategy positions it well to capitalize on growing global demand for stainless steel products, with the planned 4 million tonne Maharashtra expansion expected to be funded from a much stronger financial position than previous expansion cycles.
The brokerage highlighted Jindal Stainless' strong market position as India's largest stainless steel producer by installed capacity, sales volume and revenue. According to CNBC TV18, Goldman Sachs believes the company is well-positioned to benefit from India's rising stainless steel demand and ranks among the leading stainless steel manufacturers globally. The company's leadership position provides a solid foundation for future growth in the domestic market, with its market capitalisation standing at ₹61,922.16 crore as of the latest trading session. Goldman Sachs described Jindal Stainless as a major beneficiary of rising domestic consumption, highlighting that the company is India's largest stainless steel producer and one of the world's leading manufacturers.
Goldman Sachs' investment thesis is built on four key drivers: the company's position to benefit from structural growth in domestic stainless steel consumption, expected higher share of value-added products supporting profitability, sufficient balance sheet headroom to nearly double capacity from the current 4.2 million tonnes per annum (mtpa) over the medium term, and attractive valuation relative to expected return on equity (RoE). As reported by CNBC TV18, the brokerage's optimism adds to the Street's already positive stance, with 15 out of 17 analysts having 'Buy' ratings. The current market performance reflects this positive sentiment, with the stock showing strong momentum in recent trading sessions. The company's balance sheet provides sufficient headroom to double installed capacity without materially stretching leverage, with leverage likely to remain below 0.7 times net debt-to-EBITDA during the capex phase.
Goldman Sachs expects India's stainless steel consumption to grow at around 8% CAGR between FY24 and FY35, significantly outpacing global demand growth. With India's per capita stainless steel consumption at 3.3 kg, well below the global average of 5.5 kg, the brokerage sees ample room for demand expansion over the coming decade. The brokerage also expects profitability to improve as the company increases the share of higher-margin, value-added stainless steel products in its sales mix. Jindal Stainless is likely to benefit from contributions from its Indonesian joint venture with Tsingshan Group, which provides recurring earnings and strengthens its global raw material integration. The company's strong exposure to India's stainless steel demand, rising share of value-added products, and significant capacity expansion potential form the core of its investment case.
