JSW Steel’s stock rises on Sensex inclusion; set to replace HDFC in the Index

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July 6, 2023
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JSW Steel has gained over 11 percent in the past month.

Shares of JSW Steel surged by 1.5 percent during early trading on July 6, buoyed by the announcement of the company’s inclusion in the Sensex, the benchmark 30-stock index of S&P BSE.

The company is slated to replace Housing Development Finance Corporation (HDFC) from the Sensex on July 13.

The rejig comes after the mega-merger between HDFC and HDFC Bank came into effect on July 1.

Abhilash Pagaria, Head of Nuvama Alternative & Quantitative Research, anticipates passive inflows of approximately $145 million for JSW Steel aided by its entry into the Sensex. However, Pagaria also believes that most of the index rebalance pre-emptive positioning is already well priced in.

At 09.17 am, shares of JSW Steel were trading at Rs 797 on the BSE, up 0.6 percent from the previous close.

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Shares of JSW Steel have risen over 11 percent in the past month. The steel manufacturer’s revenue from operations for the quarter ending March remained unchanged year-on-year at Rs 46,962 crore. However, there was a 12 percent-on-year increase in its net profit which came at Rs 3,741 crore. Despite these largely positive results, the company’s margin declined to 17 percent from 19.5 percent in the previous year, primarily due to elevated costs of raw materials, power, and fuel.

Brokerage firm Motilal Oswal Financial Services maintained its ‘neutral’ stance on the steel manufacturer with a price target of Rs 700 as it believes the current stock valuation prices the upside potential.

Nomura also has a ‘reduce’ call on the stock with a target price of Rs 605. It believes that company’s the capex intensity will remain elevated but profitability will remain range-bound in the near term due to a decline in steel prices.

Also Read: BSE rejig: JSW Steel to replace HDFC in Sensex from July 13

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