Government Water Infrastructure Funding Will Spur Market Momentum

Key Takeaways

• Enhanced government and global infrastructure spending, coupled with water scarcity, underpin strong long-term demand and market expansion for Jindal Saw’s pipe segments.
  
• Capacity upgrades, cost-cutting measures, and premium product focus drive margin resilience and position the company for sustainable profitability and growth.
  
• Heavy reliance on government infrastructure spending, rising competitive pressures, and subsidiary losses create risks to revenue stability, margin strength, and long-term profitability.

Catalysts

Engages in the manufacture and supply of iron and steel pipes and pellets in India and internationally.

• Robust government funding for nationwide water infrastructure projects, especially the restoration and ramp-up of Jal Jeevan Mission allocations (~₹70,000 crore released in FY25), should reignite execution momentum from Q2 FY26 onward, supporting a multi-year demand cycle for ductile iron and steel pipes. This is likely to directly drive revenue growth and sustain plant utilization rates.
  
• Accelerating global and domestic projects in water grid management, river diversion, and urban water distribution, alongside chronic water scarcity, create strong medium
• to long-term underpinnings for municipal pipe demand. This underwrites a structurally larger addressable market, which should enable sustained topline growth in Jindal Saw’s core segments.
  
• Ongoing and recently completed capacity expansions in key segments (DI at Haresamudram, seamless tubes at Nashik) combined with cost-reduction initiatives (new coke oven battery, PCI, waste heat recovery) will both boost volume potential and structurally improve operating margins, providing visible catalysts for EBITDA and net earnings growth as new capacities ramp through FY26.
  
• Early-mover advantage in premium value-added product lines (e.g., premium connections via the Hunting JV) and a demonstrable ability to maintain stable pricing in DI pipes, despite new entrants, position Jindal Saw for higher blended realizations and margin resilience, supporting upward re-rating of profitability.
  
• Low financial leverage (term loans ~₹600-700 crore vs. net worth ~₹10,000 crore) and strong internal cash generation create headroom for future capex or international expansion, enabling Jindal Saw to capitalize on the forecast boom in global infrastructure and clean energy pipeline investment—likely driving both revenue and earnings compounding.

Jindal Saw Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Jindal Saw's revenue will grow by 4.7% annually over the next 3 years.
• Analysts assume that profit margins will increase from 8.3% today to 11.4% in 3 years time.
• Analysts expect earnings to reach ₹27.3 billion (and earnings per share of ₹42.58) by about July 2028, up from ₹17.4 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 13.9x on those 2028 earnings, up from 7.8x today. This future PE is lower than the current PE for the IN Metals and Mining industry at 22.3x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 14.61%, as per the Simply Wall St company report.

Jindal Saw Future Earnings Per Share Growth

Risks

• The company’s financial performance is plateauing, with FY25 revenues, EBITDA, PBT, and PAT largely flat versus the previous year, and management commentary suggests the upcoming year (FY26) is also likely to see only incremental improvement, indicating potential stagnation in top-line growth and earnings for the foreseeable future.
  
• Despite management’s optimism regarding continued demand from projects like Jal Jeevan Mission (JJM), a significant portion of the company’s order inflow and revenues are reliant on government water infrastructure spending, increasing vulnerability to sector cyclicality and sudden funding delays or declines, which could materially impact revenue and earnings.
  
• There is growing industry capacity in ductile iron (DI) pipes, and multiple participants questioned the impact of both capacity increases and the emergence of alternative materials (such as OPVC and HDPE), suggesting potential long-term structural risk to pricing power and market share, with possible pressure on margins and topline.
  
• Cash losses have been reported in key subsidiaries (e.g., JITF), and though recent one-offs were explained as non-cash accounting adjustments, sustained losses, incremental equity infusions, and asset write-offs point to a risk of drag on consolidated profitability and return on equity.
  
• While management notes cost advantages and leadership position, there is little evidence of significant vertical integration or protection from global input price volatility, trade shifts, or disruptive competitor strategies, meaning fluctuations in raw material costs, aggressive global competition, or decarbonization shifts could squeeze gross margins and compress future earnings.

Valuation

• The analysts have a consensus price target of ₹395.667 for Jindal Saw based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of ₹452.0, and the most bearish reporting a price target of just ₹331.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be ₹239.2 billion, earnings will come to ₹27.3 billion, and it would be trading on a PE ratio of 13.9x, assuming you use a discount rate of 14.6%.
• Given the current share price of ₹213.33, the analyst price target of ₹395.67 is 46.1% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.