Target: ₹380
CMP: ₹316.10
JSW Infrastructure has not witnessed any major cost or time overruns at its key projects, except for the Paradip iron ore terminal. We note that capex efficiency is not just seen at JSW Infra but also at its parent, JSW Steel (JSTL IN, Not rated). The company has also demonstrated a record of turning around assets and transforming low-ROCE acquisitions within 2-3 years of acquisition. We expect 18 per cent + ROCE from the new assets.
We estimate that JSW Infra addresses only 20-25 per cent of logistics opportunities from JSTL and even lower for the overall steel/coal ecosystem. Thus, we do not see it as opportunity constrained. We also think its net-cash balance sheet and the ability to raise further capital (both equity and debt) can be a catalyst for further re-rating.
JSW Infra has significant growth assets coming onstream at the end of FY27 and further in FY29. We find that a relative valuation methodology based on FY26/FY27 EV/EBITDA does not fairly value the growth potential. We factor in the contribution from the slurry pipeline and further growth capex to our DCF model and raise our TP to ₹380. Our
implied FY27E EV/EBITDA of 26x appears expensive, but given we expect growth over FY28-30, our inferred exit FY30E EV/EBITDA is only 11.5x. A key risk is the inability to secure growth assets.