Jindal Steel & Power strengthens coal supply with Saradhapur Jalatap East Mine win

Jindal Steel & Power has emerged as the highest bidder for the Saradhapur Jalatap East coal block, securing a critical raw material source for its steelmaking operations. The company was awarded the mine following Round 11 of the Ministry of Coal‘s commercial coal block auction, marking a significant step in Jindal Steel & Power’s expansion strategy.

With geological reserves estimated at 3,257 million tonnes, the mine’s close proximity—just 11 km from the Angul steel plant—positions it as a vital asset for Jindal Steel & Power’s long-term raw material security. The company will operate the block under a 10% revenue-sharing model, reinforcing its cost-competitive approach.

Strategic Coal Mine Acquisition Enhances Supply Chain Resilience

The acquisition of Saradhapur Jalatap East aligns with Jindal Steel & Power’s backward integration strategy, ensuring a stable and secure coal supply. Given the volatility in global coal prices and supply chain disruptions, securing domestic coal resources mitigates procurement risks and strengthens the company’s ability to maintain consistent production output.

The mine’s location near the company’s Utkal C, Utkal B1, and Utkal B2 coal blocks further enhances Jindal Steel & Power’s mining efficiency, allowing for shared logistics and streamlined operations. By consolidating its raw material sources, the company aims to improve cost structures, boost operational efficiency, and reinforce its leadership in the steel industry.

Market Sentiment and Stock Performance

Following the announcement of the Saradhapur Jalatap East coal block acquisition, Jindal Steel & Power’s stock rose by 1.70% to ₹914.30, reflecting investor optimism. The stock has gained 6.56% over the past month but remains 16.84% below its 52-week high of ₹1,097.00, signaling further potential upside.

Market analysts have responded favorably, with a consensus ‘Buy’ rating and an average target price of ₹974, suggesting a 6.8% upside from current levels. The company’s trailing twelve-month P/E ratio stands at 22.83, below the industry average of 26.41, making it relatively undervalued compared to its peers.

Financially, Jindal Steel & Power reported an EPS of ₹40.06 for the quarter ending December 31, 2024, reinforcing its profitability. The company maintains a dividend yield of 0.22%, with its last dividend payout of ₹2.00 per share made on August 22, 2024.

Commitment to India’s Energy Independence

This development supports the Indian government’s Aatmanirbhar Bharat initiative, which encourages domestic resource utilization to reduce dependency on imports. Jindal Steel & Power’s focus on coal self-sufficiency strengthens its role in India’s infrastructure and industrial growth while reinforcing its position as a key contributor to the country’s energy security.

Jindal Steel & Power remains committed to sustainable and responsible mining practices, ensuring compliance with environmental regulations while maximizing the strategic benefits of this acquisition.

Investment Recommendation

Considering Jindal Steel & Power’s strategic acquisition, strong financials, and bullish market sentiment, analysts recommend the stock as a ‘Buy’, particularly for investors with a medium to long-term horizon. However, given market fluctuations, investors should closely monitor developments and industry trends before making portfolio decisions.