Jindal saw – Another beneficiary of India’s growth story

Financial Performance:

• Q3 FY23 turnover grew by 38% and 63% compared to the previous two quarters, respectively
• EBITDA showed growth of 61% and 140% for the last two quarters
• Debt levels have been reduced, and the balance sheet remains strong

Order Book:

• The company has a healthy order book with a good mix of domestic and international orders
• Large dia business is expected to be a driver for the next quarter, with significant export orders in the basket
• Healthy sales funnel for future orders

Product Strategy:

• Emphasis on premium and value-added products expected to continue to contribute to growth
• Moving towards value-added and premium products in all segments, including high-grade pellets, improved coatings, and new product development in DI, seamless, and stainless steel

Capex:

• No major capex planned, but the potential for a steel project in Dilwara in the future
• Considering a truncated form of a steel plant that will cater to the Nashik and Nagothane raw material inputs, which at this point in time, they buy from outside

Guidance:

• The company is confident that the momentum will continue, and they expect a good next few quarters
• EBITDA margin expected to improve to upward of 14% in Q2 FY24
• Expectation of government support for infrastructure projects in the upcoming budget

Legal:

• Sathavahana project execution expected after advance payment
• The Sathavahana project is sub judice, but the company expects a positive result in its favor and plans to add over 200,000 metric tons to capacity once in business
• The company has not yet invested in repair and maintenance for the Sathavahana project until a positive result is received

Working Capital:

• Jindal Saw Limited is using the excess cash generated to bring down its working capital cycle, which will help control working capital utilization and lower finance costs
• Working capital utilization is positively correlated to top-line growth

Market Cap:

• The management hopes that the market cap will reflect the value they have created and are working so hard to create.

All in all, I feel this is another undervalued company with high growth prospects and is not in the limelight yet. Do share your thoughts on the same.