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Exports hit by geopolitical headwinds in MENA

Jindal Saw (JSAW IN) reported consolidated EBITDA of INR 4.8bn, in line with our estimates of INR 4.9bn. Standalone sales volumes in Q4 improved by ~5% QoQ but were lower by 11% YoY. Q4 performance was impacted by export disruptions in the MENA region due to geopolitical tensions and logistics constraints in the Persian Gulf, leading to shipment deferments and lower volumes. As a result, operating leverage also hit margins. Order book remains stable at ~1.9mn tonnes, providing ~17 months of revenue visibility based on FY26 volumes. While near-term earnings may be impacted by logistic constrains, expect earnings to start growing YoY from Q2FY27 on the back of a favorable base, strong order book and revival in line pipe and process pipe capex in India and MENA. We revise JSAW to Accumulate from Buy as the stock has moved up 17% since our initiation, but retain our estimates and TP of INR 280, on 6.5X FY28 EV/EBITDA.

Healthy backlog supports 17 months of execution visibility: Standalone order book is healthy at ~1.9mn tonnes (valued at ~USD 1.3bn), led predominantly by iron & steel pipe orders, with exports contributing ~29% of the total value. Based on FY26 pipe volumes of ~1.38mn tonnes, this translates into ~17 months of execution visibility, underpinning strong medium-term revenue outlook. This backlog excludes additional order book at UAE subsidiary (~USD 180mn / ~0.17mn tonnes) and pellet order book (~USD 24mn). With a sizeable export job-work order (~0.62mn tonnes) under execution and overall fulfilment expected in the next 9–18 months, the geographically diversified order pipeline positions JSAW well for a gradual recovery in volumes and earnings as execution normalizes.

Middle East expansion progressing well; execution on track: In the UAE, JSAW has incorporated a wholly-owned subsidiary to set up a seamless pipe facility in Abu Dhabi (KEZAD), with land secured, initial equity infused, and early orders already in place. In Saudi Arabia, its JV with Buhur Altavision is progressing on the SAW pipe facility, while the company has also approved setting up an additional LSAW pipe facility to cater to rising regional demand. Land identification and lease finalization are underway, supported by initial capital infusion from partners. Additionally, a ductile iron pipe facility in KSA is under development, with agreements signed and further corporate actions in progress. Projects remain on track and largely insulated from the ongoing Middle East geopolitical disruptions, positioning JSAW to capitalize on strong regional demand.

Revise to Accumulate with unchanged TP of INR 280: Near-term earnings are likely to remain under pressure due to logistical constraints and execution delays. However, we expect a sequential recovery with YoY earnings growth from Q2FY27, supported by a favorable base, a strong order book, and a gradual revival in line pipe and process pipe capex across India and the MENA region. We introduce FY29E while maintaining our FY27E-28E EBITDA estimates and target price of INR 280, based on 6.5x FY28E EV/EBITDA. However, as the stock has gone up by ~17% since our initiation, we revise to Accumulate from Buy. Extended period of blockage of Hormuz and delayed revival of domestic and international capex remain key risks to our call.

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