Motilal Oswal shares top bet for 2025, sees 21% upside in this infra player

Posted by Admin December 27, 2024 Infra

Believing that JSW Infrastructure is well-positioned to surpass its FY25 guidance, domestic brokerage firm Motilal Oswal has picked it as its top stock for 2025, giving a target price of Rs 375.

The target price is accompanied by a reiteration of its ‘buy’ rating and indicates an upside potential of 21% from Thursday’s closing price.

“Considering stable growth levers at its existing ports and terminals, a higher share of third-party customers, sticky cargo volumes from JSW Group companies, and an expanding portfolio, we expect JSW Infrastructure to strengthen its market dominance, leading to a 14% volume CAGR over FY24-27.
This should drive a 19% CAGR in revenue and a 20% CAGR in EBITDA over the same period,” said Motilal Oswal in its report.With a focus on expanding capacity, improving the third-party mix in overall cargo, and improving utilization levels at existing ports and terminals, the company is expected to continue its volume growth trajectory.JSW Infrastructure, the second-largest private port operator in India after Adani Ports, has a capacity of 170 MMT as of September ’24. It achieved a 22% cargo volume CAGR over FY18-24, surpassing the industry growth rate of 4%.

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The company is focused on ramping up capacity to 400 MMT by 2030, with a capex of Rs 30,000 crore (Rs 15,000 crore over FY25-28). Additionally, JSW Infra has a diversified customer base that includes third-party customers across geographies, and it has expanded its cargo mix by leveraging its locational advantage and maximizing asset utilization.“The company’s effort to expand its customer base has led to an increase in cargo handled for third-party customers in India, which posted a 55% CAGR from 11 MMT in FY21 to 43 MMT in FY24. The third-party cargo mix (by volume) improved to 48% in 1HFY25 (36% in 1HFY24) from 25% in FY21,” said Alok Deora, Research Analyst at Motilal Oswal.

With a strong balance sheet, JSW Infrastructure aims to pursue organic and inorganic growth, targeting a volume, revenue, EBITDA, and APAT CAGR of 14%, 19%, 20%, and 19%, respectively, over FY24-27.

However, a slowdown in domestic and global trade has been cited as the key downside risk for the company’s growth.

The shares of JSW Infrastructure were trading 2.6% higher at Rs 317.85 on the BSE around noon.

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