0812-014-Jindal Stainless(JSL)-29.Dec.08


Stock Watch – JSL Ltd. (0812-014) – 29 Dec 2008


JSL Ltd. (Jindal Stainless Ltd)


S. Steel



Ref No



JSL / 532508

Web site




 Price 08/12/28


Target ST


Target LT


52W High


52W Low


 ST Hold


LT Hold


Current PE


% Down Peak

– 89%





PE 2009

2.80 est.

Div Yield% CMP


Buy Range


Sell  Range

41~49 ST


SUMMARY: The largest private sector fully integrated manufacturer of Stainless Steel in India. Already on expansion leg to manufacture another 0.8 MPT (Million Per Ton) in Orissa. This is a 5000 Cr. Company which will expand by 20% in next two years in volume. In value terms, there may be growth depending on volatile Nickel prices which is a major input in value terms. (4% to 10% in volume). The use of Stainless Steel is expanding from traditional households to sanitary, public utilities such as Bus stands (they already received major contract in Delhi), outer façade of modern buildings, and even passenger coaches in trains.POSITIVE: Low equity of 16 Cr shares for a company that will have Rs 6000 Cr revenue in one year or cool Rs 375/shr. Operating margin may expand this year due to almost 20% reduction in cost input. Presuming 16% GP and 6% NP the EPS could reach Rs 22. The stock trading at Rs 33.70 discounts 1.5 times prospective PE in growth industry. Low interest rates, low fuel costs, lower Nickel in due to Russian Ruble devaluation (helps keep lower Nickel prices, Russia is a major producer), higher demand due to Infrastructure rates, make this stock appealing. JSL Financial – Annual

NEGATIVE: Loss in sequential quarter (reason not known). War with Pakistan, Election in May 2009 and prolonged recession may cause Stainless Steel dumping in India. CAUTION: Dilution effect due to Warrants and FCCB outstanding not considered as the figures are not available with me.).

VERDICT: A rare industrial stock that could multiply 5 times (400% return). The current dividend yield 6.5% (Rs 2 on CMP Rs 33.70) equals to bank deposits. Dividend yield may increase, not reduced. Fund raising at today’s price is ruled out, unless the main shareholders want to grab more shares.

Stock Behavior

It moves when the Jindal stable moves (like any other major group). Relatively less liquid. Trades often below 100K. If volume >200K on upside it goes higher. If exceed >10 lakhs on upside, it may make major move. Metal prices and movement in other Jindal stock determine its behavior Reduce position, if you are a trader, if the stock moves down on volume of 200K or more.


If you own the following stocks or slow movers, you may sell them to raise the cash and Buy the above stock.


Any stock Rs 60 to 300, and if you are losing 30% or more




Above counter in the ratio of Selling stock price /CMP of JSL



Decision Reviewed on (Date YMD) due to material events later: (for future use)


Authored by  Kalidas  Hong Kong, (Ref: 0812-012) of 2008/12/29   *= CMP was intra day

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