Broker’s call: JSW Infrastructure (Buy)
Jefferies
JSW Infrastructure (JSWI) is expected to see a 2.2 times increase in its port capacity and a 14 times rise in logistics EBITDA by FY30E, resulting in an over 30% compound annual growth rate (CAGR) in EBITDA from FY26-30E. The estimated volume growth for JSWI is 18% from FY26-30E, driven by a 22% CAGR in JSW group cargo, primarily from JSW Steel (JSTL).
JSTL aims to increase its domestic capacity by 2.1 times to 78 million tonnes by FY32E, with a 46% addition over the FY30E-FY32E period. It is expected that each tonne of steel produced will require 2.5-3 tonnes of raw material, which will be handled by JSWI. Given JSTL's expansion plans and potential in-sourcing of volumes by the JSW group through JSWI, the company's FY30E volume forecasts could see a 70 million tonne increase, or around 30% more than previously forecasted.
The recent QIP of ₹6,500 crore is believed to enable JSWI to fund its growth capex, with leverage kept in check (Net D/EBITDA 2x over FY26-30E). The price target of ₹400 for JSWI (compared to the earlier target of ₹395) is based on an estimated EV/EBITDA of 18x for FY28E-30E, compared to 16x for Adani Ports. This reflects a 25% FY28E-30E EBITDA CAGR for JSWI versus 16% for Adani Ports.
However, there are key downside risks to consider, including potential delays in JSWI/group capex plans and non-core capex expansion plans.
Written by urgent.news from Hindu BusinessLine's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
