Stocks To Buy: Four key reasons why Goldman Sachs sees this Jindal Group stock rising 38%

Shares of Jindal Stainless Ltd. gained over 2% in early trade on Tuesday, July 21, after brokerage firm Goldman Sachs initiated coverage on the stock with a 'Buy' rating and a Street-high price target of ₹1,000 per share.

The target price implies an upside potential of around 38% from Monday's closing price and is the highest among brokerages tracking the stock.

Goldman Sachs believes Jindal Stainless is well-positioned to benefit from India's rising stainless steel demand. The brokerage pointed to the company's leadership position as India's largest stainless steel producer by installed capacity, sales volume and revenue, while also ranking among the leading stainless steel manufacturers globally.

The brokerage's investment thesis is built on four key drivers:

- Jindal Stainless is best placed to benefit from the structural growth in domestic stainless steel consumption.

- A higher share of value-added products is expected to support profitability.

- The company's balance sheet provides sufficient headroom to nearly double capacity from the current 4.2 million tonnes per annum (mtpa) over the medium term.

- The stock's valuation remains attractive relative to its expected return on equity (RoE).

Goldman Sachs also expects Jindal Stainless to strengthen its global position through capacity expansion.

Following the ramp-up of its 1.2 mtpa stainless steel plant in Indonesia, a joint venture with China's Tsingshan Group, and the proposed 4 mtpa greenfield project in Maharashtra, the company is expected to control 8.2 mtpa of stainless steel melt capacity, making it the second-largest stainless steel producer globally.

The brokerage's optimism adds to the Street's already positive stance on the stock. Of the 17 analysts covering Jindal Stainless, 15 have a 'Buy' rating, while the remaining two recommend 'Hold'.

Jindal Stainless shares were last trading 1.5% higher at ₹742.45. Despite Tuesday's gains, the stock remains down 13% so far this year.

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