Jindal Steel shares plunge over 5% on weak Q4 earnings. What should investors do?

Jindal Steel & Power shares plunged over 4% after the company reported a 70% year-on-year drop in net profit for the quarter ended March 31, 2023. Top brokerages harbour mixed views about the stock. The stock closed at Rs 532 on the NSE and was down by Rs 29 or 5% from Tuesday’s closing price.

JSPL on Tuesday posted a nearly 70% decline in consolidated net profit to Rs 465.66 crore for the March quarter of FY 2022-23 due to higher expenses. The company had clocked Rs 1,527.04 crore net profit in Q4FY22. The company's total income during the quarter fell to Rs 13,707.69 crore from Rs 14,341.91 crore in the year-ago period.

Here’s how brokerages view the stock:

Morgan Stanley: Underweight | Target: Rs 460
Morgan Stanley is 'underweight' on Jindal Steel & Power and has placed the price target at Rs 460. The US-based brokerage firm said that EBITDA was much lower than its expectations. It was on account of higher operating expenses, partially offset by better realisations. The subsidiaries continued their weak performance owing to variable costs, with raw material prices rising much higher than expectations.

Macquarie: Neutral | Target: Rs 557
Macquaries remains 'neutral' on JSPL stock and puts the target at Rs 557. Higher cost led to the Q4FY23 EBITDA miss, it said. Cost per tonne was impacted by inventory write down, higher iron ore prices and higher operating costs. The project expansions are on track, the brokerage firm said.

JM Financial: Buy | Target: Rs 675
JM Financial has a 'buy' rating on the scrip and estimates the target price at Rs 675. Impending mining clearances to improve margin trajectory, the local brokerage said.

With a strong balance sheet to support growth, increasing raw material security, and low cost of production, JSP remains well positioned to withstand cyclical challenges — subject to execution risk.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)