We have upgraded the JSW Infrastructure stock to a BUY rating, driven by the recent correction in stock price and the company's efforts to achieve its planned volume growth. This decision is also influenced by the company's strategic acquisition of JSW Rail, JSW Minerals, and JSW (South) Rail from its promoter group company, valued at Rs12.12 billion.
This acquisition is expected to significantly enhance JSW Infrastructure's presence in inland transportation. By gaining access to scarce GPWIS/LSFTO licenses and adding an operational rake fleet, the company will be better positioned to support long-term cargo movement across key industries such as steel and cement. With rail freight volumes in India expected to nearly double by FY30, this move is well-timed, especially considering the moratorium on new GPWIS licenses, which limits competitive intensity.
The stock is currently trading at an Enterprise Value (EV) of 19.6x/15.5x of FY27E/FY28E EBITDA. Following a ~15% correction in stock price post Q2 results, we have upgraded the stock to BUY from Accumulate, with a target price of Rs336, valuing it at 21x EV of Sep'27E EBITDA.
Key points to consider include:
Investors should always consult with certified experts before making any investment decisions.
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