Stock to buy: Despite sell off in key benchmark indices, small-cap stock JTL Industries shares managed to climb to its new peak of ₹249.40 apiece on NSE during Friday deals. The small-cap stock was able to do that despite missing market estimates in its Q2 results 2023 declared on Thursday.
Interestingly some brokerages of well repute believe that the small-cap stock may continue to scale further new highs in upcoming sessions. Axis Securities has given buy tag to the stock giving ₹265 target in near term.
Small-cap stock at new high after Q2 results. Axis Securities sees more upside
What fundamentals signal
On reason for giving ‘buy’ tag to this small-cap stock, Axis Securities report says, “JTL is on its path to enhancing its capacity to 1MT by FY25. VAP share target is 40% for FY24 and 50% in FY25. Out of the incremental 0.4MT capacity by FY25, ~50% of the capacity will be equipped with DFT (Direct Forming Technology) which will enhance efficiency and capacity utilization. This will also add additional SKUs to the company’s portfolio. The DFT will come online in Q3FY24, which will boost VAP share in H2FY24. The management expects sustainable EBITDA/t of ₹4,800-5,300/t in FY24.”
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On small-cap companies outlook and guidance, the brokerage said, “Guidance for sales volume baseline growth for FY24 (minimum which can be surely achieved) is 30% on a YoY basis. The company will strive to exceed the 30% growth target and has guided 0.33 MT in FY24 vs. 0.24 Mt in FY23, which translates into ~40% growth YoY and ~44% utilisation at the year-end capacity of 0.75MT. This is lower than the industry standard of 60%, as volume expansion will be skewed towards Q4FY24. EBITDA/t guidance stands at ₹4,800-5,300/t for FY24.”
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JTL Industries share price target
On suggestion to stock market investors in regard to JTL Industries shares, Axis Securities said, “We maintain our BUY rating on the stock and value JTL at 23x (from 22x) it’s FY25 EPS (unchanged) to arrive at our 1-year forward target price of ₹265/share, implying an upside potential of 12% from the CMP.”
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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Updated: 14 Oct 2023, 02:36 PM IST