Buy JSW Infrastructure; target of Rs 400: Motilal Oswal

What happened

JSW Infrastructure's consolidated revenue rose 17% year on year to INR14.8b, beating Motilal Oswal's estimate by 5%. EBITDA, a rough measure of operating profit, grew 11% to INR6.7b, in line with estimates, while EBITDA margin was 45.5%.

Confirmed

Global impact / market context

Revenue growth came from higher volumes, more ancillary services and currency effects, but profit per sale narrowed from a year earlier, based on the reported margin dip. Motilal Oswal still rates the stock a buy with a Rs 400 target, so it expects growth to outweigh weaker profitability.

Analyst inference

The call rests on a target price set at 19 times FY28 EV/EBITDA, which means enterprise value compared with operating profit. That multiple and a buy rating signal confidence that port volumes and services will keep expanding, even as margin pressure and a large other-income boost draw scrutiny.

Analyst inference

What to watch

1. Watch whether EBITDA margin keeps falling from 45.5%, after the reported year-on-year and quarter-on-quarter declines, which signals how much profit each sale keeps. Confirmed
2. Track whether the roughly INR1.9b of other income recurs, since higher other income lifted reported profit by 18% to INR4.3b and can hide weaknesses in core operations. Analyst inference
3. Monitor whether volume growth and ancillary services continue to drive revenue, because those were the reported drivers of the 17% rise, and a slowdown would weaken the case for the Rs 400 target. Analyst inference

Evidence

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