With a dividend yield of 0%, is it a good idea to invest in Jindal Stainless Limited looking at the current JSL share price? Let’s find out!
Jindal Stainless Steelway Limited is a leading company within the steel industry of India. Incorporated in 1970, JSL is named among the top 10 steel companies in the world. The company has been dominating the steel industry through its digital transformation and by deploying high-tech solutions for manufacturing professional-grade products. In fact, it is one of the rare companies in the sector to make high use of Information technology for performing fast, smooth, and easy operations across a wide range of companies.
Under the scope of the firm’s highly advanced and upgraded SAP solutions, it has implemented the barcode device integration for tracking of incoming and outgoing vehicles of the plant, resulting in lower turn around time. Further, the automated systems such as the railway rake container management system, allows it to reduce detention charges and unnecessary rerun process in SAP.
Business areas of JSL
Before discussing the JSL share price analysis, it is important to understand the business areas of the company and determine its financial performance.
Know that, Jindal Stainless Ltd is the biggest manufacturer of high-quality stainless steel in 400,300, 200, and duplex series. Further, the product range of the company includes steel slabs, plates, coils, bloom, precision strips, sheets, coin blanks, and blade steel.
JSL share price analysis – key performance indicators
Below are a few performance metrics that will help you analyse the performance of Jindal Stainless Steel Limited:
Price to Earnings (P/E) ratio
The P/E ratio of any company gives you an idea of how much an investor is likely to pay for acquiring its share. The general rule is, the shares that are trading with a low P/E value, then they are undervalued. Also, undervalued shares are considered to be good for purchasing as they have higher chances of growth in the long term. JSL has a price to earnings ratio of 10.13, which means it is undervalued, and hence, a good buy.
Return on Assets (ROA)
ROA value helps in determining how efficiently a company or firm can gain returns from investments in its assets. In simple words, ROA tells you if a company can purchase the money used for purchasing assets into its profits and gains. In the case of JSL, it has a ROA value of around 4.2%, which is not a desirable value considering its future performance.
The current ratio of a company is an indicator of its ability to pay its short-term liabilities using its short-term assets. In general, a higher value of the current ratio is desired because it shows if a company can stay stable and consistent in the unfavourable market conditions. The current ratio of Jindal Steel is 1.04%.
Debt to equity ratio
Debt to equity ratio is another important metric to find out the performance and capital structure of the company. The D/E ratio of Jindal Steel is 0.94, which is a good indicator as the company has a low proportion of outstanding debt.
Inventory turnover ratio
The inventory turnover ratio is a metric that that helps in determining the liquidity of the inventory of a company. It shows how many times a company has replaced or sold its inventory over a specific period. The inventory turnover ratio of Jindal Steel is 4.98 which shows that its management is slightly inefficient.
JSL has reported a sales growth of – 5.20%, which is not a good sign considering its performance and growth.
Operating margin indicates the efficiency with which a company operates. The OM of Jindal Stainless Limited is 11.95% for the recent year.
The dividend yield of any company shows how much an investor will earn for the given price of the stock. The dividend and dividend yield of JSL for the current year is 0, and 0% respectively.
Performance of Jindal Stainless Limited Over Years
Over the last five years, the company has experienced an average growth of 25.2%. It has an industrial growth of 14.3% and a market growth of around 9.9%.
As far as the past annual earnings growth is concerned, JSL has experienced industrial growth of 131.6%, and a market growth of 42.2%.
Learn more about the past performance here:
Current JSL share price
The JSL share price as of now is ₹161.25, which is a good price to buy. Further, the market capitalization of the company is ₹8100 Crore.
Should you invest in Jindal Stainless Limited for its current JSL share price?
JSL is a growing industry, with a good financial performance over the years. It is experiencing good growth in demands, which point towards its positive future performance and stability. Currently, JSL share is undervalued, so it can be a good buy. However, it is recommended to take advice from your financial advisor before making your decision.