scorecardresearchShares of Jindal Steel and Power scaled nearly 7% during Monday’s trade;

Shares of Jindal Steel and Power scaled nearly 7% during Monday’s trade; here’s why

Updated: 19 Jun 2023, 11:58 AM IST
TL;DR.

JSPL shares surged on news of a restructuring plan for subsidiary Jindal Steel & Power (Mauritius) Ltd. Kotal Institutional Equities upgraded JSPL to 'buy' with a target of 740 per share.

JSPL is an industrial powerhouse with a dominant presence in steel, power, mining and infrastructure sectors.

JSPL is an industrial powerhouse with a dominant presence in steel, power, mining and infrastructure sectors.

Shares of Jindal Steel and Power rallied 6.7 percent on Monday, June 19 following the announcement of a restructuring plan for its subsidiary, Jindal Steel & Power (Mauritius) Ltd, aiming to reduce outstanding loans by 7,776.51 crores.

“Restructuring the balance sheet of JSPML will result in a diminution in the value of outstanding dues being loans extended by the Company to JSPML to the extent of 7,776.51 crore,” the official filing reported.

During Monday’s trade, the stock opened at a price of Rs. 558 per share against the previous close of Rs. 544.20 and grew further during the early trading session to touch an intraday high of Rs. 581.15.

It was trading at 573, up by 5.29 percent at 10:20 a.m. on the NSE.

The stock touched a 52-week-high of Rs. 622.75 on February 01, 2023 and a 52-week-low of Rs. 304.20 on June 22, 2022, indicating that at the current level, the stock is trading over 88 percent above its 52-week low and 8 percent below its 52 week high.

The stock has grown over 9 percent in the last one month. Moreover, in the past one year, it has increased by nearly 82 percent. Furthermore, the stock yielded a positive return of almost 148 percent in the last five years.

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Stock price chart of JSPL

JSPL has determined that recovering its investments in JSPML in the near future would be challenging, considering the operational and financial difficulties faced by JSPML and its subsidiaries due to global economic uncertainties.

Despite continuous efforts to revive the underperforming overseas subsidiaries, the value of investments has significantly eroded. The restructuring plan, aimed at addressing these challenges, will not impact JSPL's income statement as provisions for losses were already made in the previous financial year.

The company clarified in the filing that the promoter, promoter group, and group companies are not involved or interested in this restructuring process.

Domestic brokerage Kotal Institutional Equities has raised its rating on JSPL to 'buy' and set a target of 740 per share, citing the next 12 months as a crucial period of transformation for the company.

JSPL is an industrial powerhouse with a dominant presence in steel, power, mining and infrastructure sectors. It operates through three segments: iron and steel products, power, and others. It is also engaged in the manufacturing of cement, lime, plaster, basic iron, and structural metal products.

According to a MintGenie poll, an average of 23 analysts have a ‘BUY’ call on the stock.

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First Published: 19 Jun 2023, 10:42 AM IST