Recommendation from Metals & Mining Sector

This section gives a recommendation of a stock having stock price below Rs 150 with sound fundamentals and expected to give handsome returns over a one-year time horizon.[EasyDNNnews:PaidContentStart]

Jai Balaji Industries Ltd : RIDING WATER INFRA BOOM WITH VALUE-ADDED GROWTH

HERE IS WHY
✓ Strong policy push from Jal JeevanMission
✓ Rising share of value-added products
✓ Capacity ramp-up across DI pipes and alloys

I ndia faces growing water scarcity, intensified by rapid urbanisation, population growth, and the critical need for safe drinking water. This has created a pressing need to transport water efficiently from resourcerich to water-deficient regions. Government-led programmes such as the Jal Jeevan Mission and Atal Mission for Rejuvenation and Urban Transformation (AMRUT) are addressing this challenge, driving demand for reliable, long-lasting water transport solutions. Ductile Iron (DI) pipes, known for their strength, corrosion resistance, and 100+ year lifespan, have emerged as the preferred solution. The Indian DI pipe market, valued at USD 3.19 billion in 2024, is projected to grow to USD 9.22 billion by 2032, supported by sustainable infrastructure investments and the use of recyclable materials.

Jai Balaji Industries Limited, established in 1999, is a leading manufacturer of DI pipes and specialised ferro alloys with a strong presence in Eastern India. It operates four manufacturing units across West Bengal and Chhattisgarh, making it one of the largest private-sector producers of value-added products. Jai Balaji significantly contributes to India’s water infrastructure initiatives, supplying DI pipes for major projects like Jal Jeevan Mission and AMRUT. Internationally, it exports ferro alloys to over 40 countries and holds a Three Star Export House certification. In FY 2024–25, 55 per cent of its revenue came from value-added and specialised products.

Looking forward, Jai Balaji anticipates 25 per cent–30 per cent YoY revenue growth, with EBITDA margins expected to improve to 16 per cent–17 per cent in FY26 from 14 per cent in FY25, driven by increased value-added output and operational efficiencies. DI pipe production is set to grow from 2.82 lakh tons in FY25 to 4 lakh tons in FY26, with total capacity reaching 6 lakh tons.

The company plans to repay a large portion of its ₹221 crore term debt in FY26. Ferro alloy capacity will expand from 1.66 lakh tons to 1.9 lakh tons by Q1FY27, and TMT bar capacity has risen to 3 lakh tons, alongside expansions in hot metal and sinter capacities.

In FY25, Jai Balaji Industries reported a muted performance, largely due to a slowdown in government orders post-elections, as funding was temporarily redirected toward social schemes, delaying disbursements. Despite this, management remains optimistic about a rebound in government ordering post-Budget, expecting a robust order pipeline ahead.

The company’s revenue declined marginally by 1 per cent YoY to ₹6,350.8 crore (from ₹6,413.8 crore in FY24). Adjusted EBITDA fell 11 per cent YoY to ₹872.1 crore, with margins narrowing to 14 per cent from 15 per cent. Profit after tax (PAT) declined 37 per cent YoY to ₹557.9 crore, down from ₹879.6 crore, mainly due to a sharp drop in other income and higher tax expenses. Consequently, PAT margin fell to 9 per cent in FY25 from 14 per cent in FY24, reflecting margin pressures despite relatively steady revenue.

Jai Balaji Industries Ltd trades at a Price-to-Earnings (P/E) ratio of 20.0x, at a discount compared to the industry average of 22.3x. The company has reported a healthy Return on Equity (ROE) of 26 per cent and a Return on Capital Employed (ROCE) of 33.0 per cent. Backed by a strong growth trajectory, the company has posted a three-year sales growth of 10.6 per cent and an impressive three-year profit growth of 126.0 per cent. Given the positive industry outlook, robust capacity expansion, backward-integrated capabilities, and strong profit growth, we recommend a BUY on the stock.

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