Infra space has been in focus on the back of the expansion of capex outlay in the Interim Budget 2024. The $1.45 trillion investment in infrastructure projects over the next five years represents a significant commitment by the Indian government to modernize and develop the country's infrastructure. This substantial investment has the potential to drive economic growth, create jobs, improve connectivity, and enhance the overall quality of life for citizens. This has increased focus on infra sector stocks. JSW Infra is one such stock to benefit from it.
Stock Price Trend
Currently trading at around ₹236, the newly listed JSW Infra has surged almost 100 percent jump from its IPO price of ₹119 in less than 5 months.
The port infra firm had made a strong debut on the bourses on October 3, 2023, listing at ₹143 on NSE and BSE, a premium of 20.17 percent from its IPO price.
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The ₹2,800 crore IPO was open for subscription between September 25 and September 27 at a price band in the range of ₹113-119 per share. The issue was overall subscribed to 37.37 times. The portion for qualified institutional bidders (QIBs) was booked 57.09 times, while the portion set aside for non-institutional investors saw 15.99 times bidding. The allocation reserved for retail investors was subscribed to a little more than 10.32 times during the bidding process. The IPO comprised of only a fresh issuance of ₹2,800 crore worth of shares; there's no offer for sale (OFS) component.
The stock has advanced 10 percent just in February so far after a 3.2 percent rise in January. However, before this, it fell 1 percent in December 2023 but had rallied over 24 percent in November last year.
Late last year, the stock hit its record high of ₹247.40 on December 7, 2023. It is currently just around 5 percent away from that peak. Meanwhile, it has advanced over 66 percent from its 52-week low of ₹141.75, hit on its listing day (October 3, 2023).
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Earnings
JSW Infra's consolidated net profit more than doubled year-on-year (YoY) to ₹250.66 crore in the December quarter, buoyed by increased cargo volumes and higher tariffs. The JSW Group company had reported ₹114.89 crore in net profit a year ago.
Its revenue from operations in Q3FY24 stood at ₹940.11 crore, rising 17.85 YoY. The new container segment accounted for around 2 percent of the total volumes during the quarter, it said in a statement.
India’s second-largest private port operator reported an Ebitda (earnings before interest, taxes, depreciation and amortization) of ₹558 crore in the quarter, registering a growth of 33 percent YoY. Ebitda margin came in at 54.8 percent.
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Technical View
Om Mehra, Technical Analyst, SAMCO Securities
After a substantial consolidation, the stock has found support at the 61.8 percent Fibonacci retracement and has been inching higher in the daily chart. Notably, its current trading level above the 20-day and 50-day moving averages indicates strength in stock. The upward momentum is further reinforced by significant trading volume and a higher delivery percentage. Concurrently, the ascending RSI in the weekly chart not only corroborates the strength but also suggests ample room for an extended rally.
Hence, based on the above technical structure, one can initiate a long position at CMP ₹233.1 for a target price of ₹258. The stop-loss can be kept at ₹218.
Rohan Shah - Technical Analyst, Religare Broking Ltd
JSWINFRA has been trading in a range for the past 6 weeks wherein 250 is acting as a resistance and 210-205 acting as support on the lower end. Currently stock is trading near the upper end of the mentioned range. Thus we believe traders should avoid fresh longs at the current juncture and wait for a decisive breakout. In case the stock records a breakout from the range, the stock would attract fresh upward momentum and inch higher toward the 261 and 275 zones. While failing to do so, we shall witness profit taking and stock declining lower towards 226 and 220 zones in the near term.
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Pravesh Gour, Senior Technical Analyst at Swastika Investmart
The counter is in the formation of a higher highs and higher lows formation as well as a breakout of a long consolidation formation with strong volume on the daily chart.
The overall structure looks lucrative as it trades above all its SMA moving averages, and the momentum indicators are also positively poised.
On the upside, the Counter is facing a susceptible area around ₹250; above this, one can expect a level of ₹274; on the downside, ₹220 is the important support level.
Fundamental View
Anand Rathi
In a recent note, domestic brokerage house Anand Rathi has given a bullish outlook on the stock with a target price of ₹290, implying a 23 percent upside from current levels. With a strong balance sheet in the sector, the company is well-positioned to pursue organic and inorganic growth opportunities, we remain positive on the company, the brokerage said.
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"In the most recent interim budget announcement, there has been a notable uptick of 11 percent in the infrastructure capital outlay for the fiscal year '25, amounting to a substantial Rs11.11 lakh crore. This significant increase is poised to sustain and even amplify the ongoing economic growth trajectory. Moreover, significant efforts are underway by the government to enhance the efficiency and efficacy of the logistics sector, promising a considerable boost in operational effectiveness. The prolonged disturbances along the Red Sea trade route have presented a potential threat to the stability of global supply chains. However, the company remains insulated from these challenges as most of its cargo is sourced from bulk terminals in Australia, Canada, the USA, and Russia," noted the brokerage.
It also pointed out that during the 9M-FY24, the total cargo volume handled amounted to 77.2 million tons, a year-on-year (YoY) growth of 17 percent. Their third-party cargo segment experienced an impressive surge of 37 percent YoY, reaching 28.8 million tons. Consequently, the proportion of third-party cargo within the overall cargo mix has risen to 37 percent, up from 32 percent during the same period a year ago. This aligns seamlessly with their strategic objective of elevating the third-party business to 40 percent in the foreseeable future.
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Anand Rathi also stated that in the previous quarter, the company secured a controlling stake in PNP Maritime Services, PNP Port. Presently, the port can handle 5 million tons per annum with a promising capacity for expansion to 19 million tons per annum. Due to continuous capacity enhancements through acquisitions, the aggregate cargo handling capacity has risen to 170 million tons per annum, up from the previously reported 158.4 million tons per annum. The company has also completed the previously announced acquisition of a liquid storage terminal of 465,000 cubic meters capacity or 5 million tons per annum at the Port of Fujairah in the United Arab Emirates, it added.
Kotak Institutional Equities
However, another brokerage Kotak Institutional Equities has a sell call on the stock with a target price of ₹180, indicating a downside potential of almost 24 percent citing expensive valuations. However, it is still positive on the firm's long-term outlook.
Kotak suggests that JSW Infrastructure is positioned for significant growth, outpacing the sector's expansion by 1.5 times. This optimistic outlook is attributed to several factors, primarily its close association with its parent company and the potential for reinvesting cash flows. Leveraging its strong ties with the parent company, JSW Infrastructure is expected to benefit from favorable terms and conditions, particularly in light of the virtual duopoly it enjoys in the private sector for bulk cargo.
"JSW Infra has added projects equivalent to $200-250 million of EV in recent times and can add 10 times of such a quantum while abiding by the 2.5 times net debt-to-Ebitda by FY2030. The returns on such investments may be healthy, given the duopolistic nature of port capacities for bulk cargo. The parent’s relationship would remain the single largest determinant of growth, planned capacity additions in steel and the prospects of wallet share gains," it said.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decision.