JTL Industries-BUY

Our Investment thesis

• JTL infra is a manufacturer and supplier of steel tubes and piles having user applications in sectors like infrastructure, solar power, energy , water transportation, railways which are growth focus of this government
• Have great clientele profile like tata power, Har ghar Jal , ashok leyland, Suzlon , Siemens, elecon etc
• Last year company did EBITDA of 129cr , this year can do 165cr and 225cr for FY25 .
• A debt free company with 30% ROCE and 30% growth
• Capacity increase fron 5.9 lac ton to 7.8 lac ton next year and 1 million ton by FY26
• Currently higher margin galvanised steel is 40% off revenue which will become 55% by 2026 so current EBITDA margin of 7% will become 8.5%
• Promoters bought 9 lakh shares from open market yesterday and is inclined to buy more. Promoter has plan to increase stake as they feel business is hugely undervalued
• Jan jal mission 50 bln usd project by Narendra modi govt uses 15pc of JTL pipe volumes
• Apart from that solar modules wind power railway bridges oil & Gas transmission are other key users
• Has excellent asset turn ratio. Net block of only 100cr while ttm revenue 1850cr which will become 3200cr by FY25 And 4200cr by FY26 with 8.5% margin so FY26 ebitda can be 360cr and PAT can be 240cr so trading at 14x FY26e ,with 30% ROCE and 30% growth and supplying to sectors which aligns with narendra modis active interest makes the stock very compelling hence we assign target price of Rs350 (70% upside)
• TTM P/e is 30x vs 57x for Apl apollo while product mix is 80% same