Shares of Jindal Steel and Power fell as much as 6 percent on Monday after the company's June quarter results which were a convincing beat on street expectations. This is the biggest single-day drop in the stock in nearly a year.
The company's operating profit or EBITDA at Rs 2,628 crore was well above the CNBC-TV18 poll of Rs 2,188 crore. EBITDA margin of 20.87 percent was also higher than the estimate of 17.1 percent.
Despite the drop in share price, 64 percent of the 25 analysts who track JSPL continue to have a buy rating on the stock. Five of them have a hold rating, while four have a sell call.
Brokerage firm Citi has maintained its buy rating on the stock with a price target of Rs 810. The brokerage said that JSPL is a play on the China recovery and that their net debt to EBITDA will likely sustain below 1 times.
Kotak Institutional Equities has also maintained a buy rating on the stock with a price target of Rs 815. It said that JSPL getting mining lease approval for two of its four allocated thermal coal mines is a key catalyst in its margin expansion thesis.
However, CLSA has downgraded the stock to underperform with a price target of Rs 720. It said that it sees downside risks to consensus estimates with spread correction and delay in expansion.
JSPL's share price drop in today's session could also be a case of pre-buying ahead of the results. The stock had ended at the day's high on Friday, while the market ended at the day's low.
Shares of JSPL are currently trading 4.4 percent lower at Rs 667.65.
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