Even as the market has been undergoing volatility in the past week, investors are confused about which stocks to buy and which stocks to sell. Brokerage houses Central Broking and Anand Rathi have given their BUY recommendations about three stocks — JSPL, NMDC, and NCL Industries. Check the brokerage companies’ recommendations in detail:
Jindal Steel and Power
Central Broking has said JSPL reported higher-than-expected consolidated adjusted EBITDA of about Rs 2,620 crore, up 20 per cent QoQ. The increase is largely due to a combination of higher realisation and lower cost. During the quarter, JSP received approval for two coal mines out of 4 allocated to the company. “This will help to replace e-auction coal supplies and after fully ramp up can meet 2/3rd of overall thermal coal requirement,” Central Broking said.
It said JSPL’s net debt decreased to 15-year low to Rs 6,810 crore, down 2 per cent QoQ, supported by strong operating cash flow. The company is in a healthy state with a net debt/EBITDA of 0.75x. JSPL is confident to complete expansion to 15mtpa by FY25 end.
“We reiterate BUY rating on the stock and believe company is better positioned with strong balancesheet and improvement in earnings visibility due to commissioning of various capex projects in FY24 and FY25. We value at 5.5x EV/EBITDA and arrive at target price of Rs 764,” it said.
NMDC Ltd
Central Broking said NMDC reported an EBITDA of Rs 2,000 crore, up about 5 per cent YoY and EBITDA/t at Rs 1,818. The increase in EBITDA was primarily due to a significant increase in sales volume up 41 per cent YoY offsetting a 20 per cent decline in realisation/t. During the quarter, sales volume was higher than production and achieved the highest ever Q1 volume.
The clearance for Kumarswamy expansion from 7mt to 10mt is expected to receive by Sept 2023 end. Besides, Bacheli mine upgradation of screening plant will further add 3mtpa and completion of KK line in FY24 will improve evacuation and logistics efficiency.
“We maintain BUY rating and increase target price to Rs146/share (Earlier: Rs133/sh), valuing at 4.5x (earlier: 4.0x) FY25E EV/EBITDA. At current price, it is trading at 3.5x FY25 EV/EBITDA,” Central Broking said.
NCL Industries
Another brokerage Anand Rathi said good demand, savings in fuel and a low base aided NCL’s Q1: Revenue/ EBITDA grew 12.8 per cent/ 92.2 per cent y/y. Approval for its 0.6m tonne Vizag GU expansion is expected in a month. While EBITDA breakeven of the door division is expected by end-FY24, improving RMC division is positive.
“We retain our BUY rating, at a higher 12-mth TP of Rs 291, earlier Rs 251,” Anand Rathi said.
It said that bolstered by the better cement and RMC divisions’ performances, overall revenue grew 12.8 per cent y/y to Rs 4.4 billion, 23 per cent y/y higher sales volumes pushed up cement revenue 11% y/y, partially offset by 8% y/y lower NSR.
Having received environmental clearance, approval to construct the 0.6m-ton Vizag unit is expected in a month. The expansion would be completed in 18 months at Rs1.4 billion capex, Anand Rathi said.
