Analysing potential undervalued stock from steel industry
We are going to analyze potential undervalued, High return stock
Company name : Jindal saw
Nse: JINDALSAW
ABOUT COMPANY
Jindal Saw Ltd manufactures LSAW pipes, HSAW pipes, DI pipes, seamless pipes and pellets
- Foundation and Growth: Established in 1984, Jindal SAW has grown to become a leading manufacturer of various types of pipes, including Submerged Arc Welded (SAW) pipes, Ductile Iron (DI) pipes, and seamless pipes. The company operates manufacturing facilities in India, the United States, Europe, and the UAE, catering to a global market.
- Diverse Product Range: The company's primary business segment focuses on iron and steel products, with divisions dedicated to welded line pipes, DI pipes, seamless pipes and tubes, as well as mining and pellet production. This diversification allows Jindal SAW to serve multiple sectors, including oil and gas, water supply, and power generation
- Industry Leadership: Jindal SAW is recognized as a market leader in the manufacturing of large-diameter SAW pipes using advanced techniques such as UOE (U-forming), JCO (J-forming), and helical processes. This leadership position is crucial for securing contracts in major infrastructure projects
Product Details
SAW pipes, or Submerged Arc Welded pipes, are a type of welded steel pipe made using the submerged arc welding process. This method involves fusing steel plates or coils through an automated technique that provides high strength and durability.
major usage
- Oil and Gas Industry: SAW pipes are predominantly used for transporting flammable and non-flammable liquids, including oil and natural gas. Their structural integrity makes them ideal for both onshore and offshore pipelines.
- Construction: These pipes are also utilized in various construction applications due to their strength and durability
Global demand
- Asia-Pacific Dominance: The Asia-Pacific region is projected to be the largest consumer of SAW pipes due to rapid urbanization and infrastructure development in countries like China and India. This region's robust investment in transportation and utilities is expected to drive substantial market growth.
- North America Growth: In North America, particularly the United States and Canada, infrastructure investments related to shale gas exploration and pipeline expansions are propelling demand for SAW pipes. The market is characterized by significant activity in both industrial and residential sectors.
- Europe's Regulatory Environment: Europe’s market for SAW pipes is influenced by stringent quality standards and environmental regulations. Demand here is driven by urbanization and renewable energy projects aimed at modernizing infrastructure
The global SAW pipe market is expected to continue its upward trajectory due to these driving factors. With a projected compound annual growth rate (CAGR) of around 4% to 5% over the next several years, the market presents significant opportunities for manufacturers and suppliers aiming to capitalize on rising demand across various sectors
Business Outlook:
- Shift toward value-added products is evident, enhancing margins.
- Robust order book in water infrastructure and oil & gas sectors, including a 70% water sector contribution.
- The company foresees continued strong performance with high capacity utilization.
Future Plans:
- Exploring potential expansions, especially in stainless steel and premium segments.
- Optimistic outlook on infrastructure and oil projects, especially exports.
company chart showing clear momentum & bullish
(click on the image to see full picture)
Our valuation
Our Assumption
next 3 years profit growth = 20% (CAGR)
3rd year terminal PE = 15
Based on our estimation(Used our intrinsic value calculation)
stock is undervalued and trading at discount of 34%.
so market will realize the real value soon and 34% of upside potential is possible. To find detailed analysis of 5year and 10 year valuation you can check our course to learn detailed explanation and excel sheet.
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