Jindal Stainless Shares Surge After Company Fixes Record Date for Merger With JSL; Details

Jindal Stainless (Hisar) (JSHL) shares hit a record high of Rs 504.55 as they gained 3 per cent on the BSE in Friday’s intra-day trade after the company fixed Thursday, March 9, 2023 as record date for merger of Jindal Stainless (Hisar) with Jindal Stainless.

“..in terms of Regulation 42 and 60 of SEBI Listing Regulations, the requirements of the stock exchanges and pursuant to Clauses 15 and 34 and other applicable provisions of the composite scheme, to fix Thursday, March 9, 2023 as the Record Date, for the purpose of determining the entitlement for issue of Equity shares of the company to the shareholders of JSHL and JSLLL based on the share exchange ratio,” said Jindal Stainless announced in the exchange filing.

JSHL Board approved merger of JSHL into JSL with a swap ratio of 1: 1.95. For each share held in JSHL, a shareholder will get 1.95 shares of JSL. The appointed date for the deal was April, 1, 2020 and it is likely to conclude in FY2023

On rationale behind the merger, the company said the merged entity – JSL, as an Indian MNC, would enter the league of top 10 global stainless steel producers. This would also pave the way for consolidation of stainless steel business into one entity with a total capacity of 1.9 million tonnes per annum (MTPA). Merger with JSL will help in consolidation of complementing strengths with stronger financial positioning, JSHL said.

In December 2022, Jindal Stainless had received regulatory approval for its merger with Jindal Stainless (Hisar) from the National Company Law Tribunal (NCLT). The two companies had been demerged in 2015 as part of a financial and operational restructuring exercise to bring down the cost of borrowing.

The company informed that it received a copy of the final order of the NCLT Chandigarh Bench, sanctioning the Composite Scheme of Arrangement under Section 66, 230-232 and other applicable provisions of the Companies Act, 2013, amongst Jindal Stainless Limited (JSL), Jindal Stainless (Hisar) Limited (JSHL), JSL Lifestyle Limited (JSLLL), JSL Media Limited (JML), Jindal Stainless Corporate Management Services Private Limited (JSCMS) and Jindal Lifestyle Limited (JLL) and their respective shareholders and creditors.

According to analysts at ICICI Securities, JSL is at the cusp of profitability/volume improvement largely on the back of commissioning of new capacity (1.0mntepa) and removal of export duty. Furthermore, the acquisition of JUSL (Jindal United Steel Ltd) is likely to improve margins by ~Rs 4,000/t.

“Taking cognisance of regulatory overhang being removed, we raise our valuation multiple by 10 per cent to 5.5x. We also raise JSL’s (standalone) FY24E volume to 1.4mnte (earlier 1.1mnte) led by better avenue for exports and improving domestic potential,” the brokerage firm said in a report. The stock, however, is trading above their target price of Rs 270 per share.

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