Jindal Saw soars 9%, hits new high in a weak market on healthy biz outlook

In the past two weeks, the stock has surged 31% after the company reported strong Q4 earnings with consolidated net profit more-than-doubling to Rs 294 crore

Shares of Jindal Saw hit a new high of Rs 229.50 in an otherwise a weak market, as they rallied 9 per cent on the BSE in Wednesday's intra-day amid heavy volumes.

At 01:42 PM, the stock was quoting 8 per cent higher on the back of nearly two-fold jump in trading volumes. A combined around 10 million equity shares, representing 3 per cent of total equity of Jindal Saw, has so far changed hands on the NSE and BSE.

In the past two weeks, the stock of the iron & steel company has surged 31 per cent after the company reported strong March quarter (Q4FY23) earnings with a consolidated net profit more-than-doubling to Rs 294 crore on the back of healthy operational performance. It had posted profit of Rs 121.84 crore in the year-ago quarter and of Rs 143.23 crore in the previous quarter.

Revenue from operations grew 30.7 per cent to Rs 5,188 crore from Rs 3,969 crore in the year-ago quarter. Earnings before interest, taxes, depreciation and amortization (ebitda) also increased 50 per cent YoY at Rs 600 crore; Ebitda margin improved 148 bps YoY at 11.57 per cent.

The company has reported consistent revenue growth in recent years, owing to increased sales volumes, improved capacity utilizations and higher realisations. However, rising raw material costs and industry competition have had an impact on the Company’s profitability.

Thus far in the calendar year 2023, the stock price of Jindal Saw has more-than-doubled, zooming 122 per cent, as compared to 2.3 per cent rise in the S&P BSE Sensex.

Jindal Saw, the flagship company of the PR Jindal group, sells products such as longitudinal submerged arc welded (LSAW) pipes, helical SAW (HSAW) pipes, ductile iron (DI) pipes and seamless pipes and pellets. The company is a leading global manufacturer and supplier of iron & steel pipe products, pipe accessories and pellets, with manufacturing facilities in India, USA and Abu Dhabi (United Arab Emirates).

India has imposed anti-dumping duty on stainless steel tube imports from China for five years. The duty ensures fair trading practices and creates a level-playing field for domestic producers vis-a-vis foreign producers and exporters. The implementation of this antidumping duty is expected to boost the company’s presence in the local market and accelerate the utilization of increased capacities beyond initial projections.

Exports incentive under RoDTEP Scheme (Remission of Duties and Taxes on Exported Products) drive exports further. With its focus on exports and growing order book, the Company stands to gain from this incentive, Jindal Saw said in FY22-23 annual report.

The Made in India and Aatma Nirbhar Bharat initiatives of the government aims to boost local production and increase the competitiveness of Indian industries. The company has initiated steps to develop the value-added products in India. This may present prospects for Jindal Saw to grow its operations and enhance its local market share, the company said.

The domestic steel industry, which grew between 5 per cent and 7 per cent on a year-on-year basis, is expected to play a bigger role in enabling India to achieve the 5 trillion economy target by 2025.

Jindal Saw anticipates that the recent government policy announcements about railways, roads, civil aviation, gas pipelines for affordable housing, and increased budgetary allocation to this sector would support a relatively solid demand recovery and drive the need for iron & steel products.

The Government Policies like Production Linked Incentive (PLI), Jal Jeevan Mission, PM Jivan Yojana targeting development in various sectors like infrastructure, housing and development pose a unique opportunity for Jindal Saw, the company said in annual report.