JSW Infra extends rally, up 7% on capex Plans; BNP Paribas raises target

Shares of JSW Infrastructure zoomed 6.92 per cent at Rs 338 per share on the BSE in Wednesday’s intraday deals. JSW Infrastructure share price has gained 10.45 per cent in the last three sessions after the company on Monday announced its capex plans involving an investment of Rs 2,359 crore for capacity expansion.

India’s second-largest private commercial port operator plans to expand capacity at its Jaigarh and Dharamtar Ports in Maharashtra. As part of its financial year 2030 (FY30) growth plan, the company aims to boost capacity from 170 million tonnes per annum (MTPA) to 400 MTPA.

The expansion includes adding 36 MTPA capacity (21 MTPA at Dharamtar and 15 MTPA at Jaigarh), enhancing infrastructure, and increasing Jaigarh's capacity to 70 MTPA and Dharamtar to 55 MTPA. 

The capex plan includes mechanical, civil, and electrical work for the new berths and additional infrastructure, such as railway siding for Jaigarh Port, to boost third-party cargo movement. The expansion at both ports is expected to generate an additional cargo handling volume of approximately 27 MTPA. Construction at both ports is anticipated to be completed by March 2027, the company informed in an exchange filing on Monday. 

According to domestic brokerage firm BNP Paribas, the company and its parent JSW Steel both are seeing capex efficiency and historically they have not witnessed any major cost or time overruns at its key projects, except for the Paradip iron ore terminal. Considering the capex plans, the brokerage has raised its target price for the stock to Rs 380, a 20 per cent upside from Tuesday’s close and a 13 per cent from its current market price of Rs 334.20. 

“We note that capex efficiency is not just seen at JSW Infrastructure but also at its parent, JSW Steel. The company has also demonstrated a record of turning around assets and transforming low-ROCE acquisitions within 2-3 years of acquisition. We expect over 18 per cent ROCE from the new assets,”said Priyankar Biswas, analyst – India industrials, logistics and metals at BNP Paribas.

Biswas also noted that the expansion plans addresses only 20-25 per cent of logistics opportunities from JSW Steel and even lower for the overall steel and coal ecosystem. 

The brokerage firm said that the company’s net-cash balance sheet and the ability to raise further capital (both equity and debt) can be a catalyst for further re-rating. The brokerage said JSW Infrastructure has significant growth assets coming onstream at the end of FY27 and further in FY29.

“We factor in the contribution from the slurry pipeline and further growth capex to our DCF model and raise our target price to Rs 380. Our implied FY27E EV/Ebitda of 26x appears expensive, but given we expect growth over FY 28-30, our inferred exit FY30E EV/EBITDA is only 11.5x. A key risk is the inability to secure growth assets,” Biswas said. 

For the April-June quarter of financial year 2024-25 (Q1FY25),  JSW Infrastructure reported an 8.9 per cent year-on-year decline in net profit, falling to Rs 292.4 crore for Q1FY25, compared to Rs 320 crore in the same quarter last year. Revenue from operations rose 15 per cent to Rs 1,009.8 crore, up from Rs 878.1 crore a year earlier.

The company has a total market capitalisation of Rs 70,770.05 crore. Its shares are trading at a price to earnings multiple of 208.41 times with an earning per share of Rs 1.52, according to data available on BSE. 

At 12:53 PM; the share price of the company was trading 5.95 per cent higher at Rs 334.90 a piece. By comparison, the BSE Sensex was trading 0.09 per cent higher at 81,992 levels.