JTLIND: 3 year Downtrend Trendline Breakout, Chart of the WeekFrom ₹138 to ₹50: Why This Old Multi-Bagger Steel Stock Just Hit 20% Upper Circuit, Breaking 3-Year Downtrend and Getting a Big Order. Let's Understand in "Chart of The Week"
As per the Latest SEBI Mandate, this isn't a Trading/Investment RECOMMENDATION nor for Educational Purposes; it is just for Informational purposes only. The chart data used is 3 Months old, as Showing Live Chart Data is not allowed according to the New SEBI Mandate.
Disclaimer: "I am not a SEBI REGISTERED RESEARCH ANALYST AND INVESTMENT ADVISER."
This analysis is intended solely for informational purposes and should not be interpreted as financial advice. It is advisable to consult a qualified financial advisor or conduct thorough research before making investment decisions.
Price Action:
- Current Price: ₹72.29
- 52W High: ₹138.30
- 52W Low: ₹21.79
- The stock has recently broken above a critical downward trendline that had been in effect since mid-2024, showing strong reversal momentum with 15x average volume spike
Volume Spread Analysis:
Volume Characteristics:
- Average Volume: 1.42M shares
- Recent Spike: 21.33M shares (15x average)
- This represents exceptional institutional participation and strong momentum buying
- Historical volume spikes occurred during the 2021-2023 rally phase, suggesting similar strong hands accumulation
Volume Patterns:
- Volume dried up significantly during the downtrend, reaching multi-year lows near the ₹50 base
- This "spring" action with low volume at support followed by explosive volume on breakout is a classic Wyckoff accumulation pattern
- The volume bar chart shows distinct phases: high volume during 2023 rally, declining volume during correction, and massive spike on recent breakout
Volume-Price Correlation:
- The stock showed positive volume-price correlation during the breakout, confirming institutional buying
- Previous high-volume days in 2023 coincided with price rallies, suggesting volume leads price for this stock
- Current volume expansion suggests a potential multi-week rally ahead
Base Formation and Support Levels:
- Primary Base: ₹50-55 zone (marked with horizontal green dashed line)
- This base represents a critical accumulation zone where most institutional hands exchanged during the 2021-2022 period
- The stock tested this support multiple times between 2021-2022 before the explosive rally to ₹138
- Recent re-test of this base in late 2025/early 2026 at ₹50-52 suggests strong institutional buying interest
- Secondary Support: ₹21-22 zone represents the absolute low and panic bottom
Resistance Levels:
- Immediate Resistance: ₹80-85 zone
- Major Resistance: ₹95-100 (previous consolidation area in mid-2025)
- Critical Resistance: ₹110-115 zone
- Ultimate Resistance: ₹120-125 (prior to all-time high of ₹138.30)
Trendline Analysis:
- A clear downward trendline has been connecting lower highs since the peak at ₹138.30
- This trendline acted as resistance throughout 2024-2025, rejecting multiple bounce attempts
- Recent breakout above this trendline with massive volume confirms trend reversal
- The breakout occurred at approximately ₹60-62 level, suggesting the downtrend has been structurally broken
Breakout Confirmation:
- The recent 40% single-day rally with 20% upper circuit suggests strong momentum
- Breakout above the descending trendline with volume confirmation is a textbook bullish signal
- The stock reclaimed the ₹70 level, which previously acted as support-turned-resistance
Sectoral Backdrop:
Industry Overview:
- JTL Industries operates in the Steel Pipes & Tubes manufacturing sector, specifically focused on Electric Resistance Welded (ERW) pipes
- The company is positioned in the Basic Materials sector, under Steel & Iron Products subsector
- It serves critical end-use industries including Infrastructure, Oil & Gas, Power Transmission, Water Management, and Construction
Market Position:
- JTL is among the top 5 steel tube manufacturers in India and the largest ERW pipe manufacturer in North India
- Current manufacturing capacity: 9,36,000 MTPA (Metric Tons Per Annum) across 4 state-of-the-art facilities
- Geographic presence: Pan-India domestic market plus exports to 20+ countries across 5 continents
- Product portfolio: 1,200+ SKUs covering MS Black pipes, Galvanized pipes, Hollow sections, Solar mounting structures, Transmission towers, and specialty products
Sectoral Growth Drivers:
- Infrastructure Boom: India's infrastructure spending is accelerating with massive government projects including Bharatmala (34,800 km highways), PM-AWAS housing program, and Smart Cities 2.0
- Steel Demand Growth: India's steel demand is projected to grow at approximately 9% CAGR during 2025-2026, the highest globally according to World Steel Association
- Pipe Market Expansion: The Indian steel pipes market is expected to grow from USD 32.88 billion (2023) to USD 37.69 billion by 2030 at a CAGR of 6.43%
- Government Policy Support: Production Linked Incentive (PLI) scheme for specialty steel worth ₹27,106 crore and preferential procurement mandates support domestic manufacturers
- Power Sector Growth: Significant investments in power transmission infrastructure across India creating sustained demand for transmission towers and related products
Sector Challenges:
- Raw Material Volatility: Steel prices remain subject to global commodity cycles, coal costs, and iron ore price fluctuations
- Chinese Competition: China's steel oversupply and export surge create pricing pressure
- Environmental Regulations: EU's Carbon Border Adjustment Mechanism (CBAM) effective 2026 could add USD 80-397 per ton cost to exports
- Working Capital Intensity: Industry characterized by high working capital requirements (JTL's working capital days increased from 100 to 147 days)
Fundamental Backdrop:
Business Model:
- Integrated manufacturer of ERW steel pipes with backward integration capabilities
- Recent acquisition of 67% stake in Nabha Steels & Metals adds 2 lakh MT HRC (Hot Rolled Coil) capacity
- Diversified customer base across B2B, B2G, OEMs, and international markets reduces concentration risk
- Distribution network of 800+ dealers/distributors ensures strong market reach
Recent Corporate Actions:
- Major Order Win: Secured significant order from Punjab State Transmission Corporation Limited (PSTCL) for manufacturing 220kV transmission tower material and substation structures
- Execution Timeline: Order to be completed within FY 2025-26
- Strategic Significance: This order reinforces JTL's positioning in the power transmission infrastructure segment
- Stock Impact: The PSTCL order announcement triggered a 20% upper circuit rally, demonstrating market confidence
Financial Performance Snapshot:
- Q2 FY26 Revenue: ₹371 crores (down 22% YoY from ₹480 crores)
- Q2 FY26 EBITDA: ₹29 crores
- EBITDA Margin: Improved to 8% (from 6% YoY)
- EBITDA per ton: Increased 29% YoY to ₹4,247
- Market Capitalization: Approximately ₹2,360 crores
- Sales Mix: 88% domestic, 12% exports
Operational Efficiency Metrics:
- Despite revenue decline, operational efficiency has improved as evidenced by EBITDA margin expansion
- Higher EBITDA per ton suggests better realization and product mix optimization
- Working capital pressure visible with debtor days increasing from 40.1 to 52.8 days
Growth Catalysts:
- Capacity Expansion: With acquired Nabha Steels capacity, total capacity stands at 6 lakh MT for pipes + 2.5 lakh MT HRC + 1 lakh MT long products
- Product Diversification: Expansion into solar mounting structures, transmission towers, and specialty products reduces cyclicality
- Export Growth Potential: Recognition as "Star Export House" by Government of India supports international expansion
- Green Transition: Focus on sustainable practices and potential for green steel production aligns with global trends
Management & Governance:
- Promoter holding remains stable with recent inter-se transfers within promoter group
- ISO 9001:2015 certified operations demonstrating quality commitment
- Established in 1991, providing 30+ years of industry expertise
- Leadership under Pranav Singla (Executive Director) has articulated growth strategy and export targets
Competitive Landscape:
- Key competitors include APL Apollo Tubes, Rama Steel Tubes, Hi-Tech Pipes, Sambhv Steel
- Industry seeing consolidation with smaller players struggling with working capital and raw material costs
- JTL's integrated model and backward integration through Nabha Steels acquisition provides competitive advantage
Valuation Considerations:
- 5-Year Returns: Stock has delivered 312% returns over 5 years vs NIFTY 50's 79%
- Despite recent correction from ₹138 to ₹50, long-term value creation trajectory remains intact
- Current levels around ₹72 offer attractive entry for investors with 2-3 year horizon
- Recent order wins and capacity additions support earnings growth potential
Bull Case:
- Technical breakout from multi-month downtrend with exceptional volume confirmation
- Strong sectoral tailwinds from India's infrastructure boom and 9% steel demand growth
- Recent PSTCL order validates competitive positioning and execution capabilities
- Improved operational efficiency despite revenue headwinds
- Capacity expansion and backward integration strengthen margin profile
- Government policy support through PLI schemes and procurement preferences
Bear Case:
- Revenue declined 11% YoY in Q2 FY26, indicating near-term demand challenges
- Working capital pressure with increased debtor and working capital days
- Raw material cost volatility remains a persistent risk
- Global trade uncertainties and potential CBAM impact on exports
- Chinese steel oversupply creating pricing pressure
- Technical pattern needs confirmation with sustained trading above ₹65-70 zone
Key Monitorables:
- Quarterly revenue and EBITDA trend in coming quarters
- Execution and revenue recognition from PSTCL order
- Raw material cost trends and margin sustainability
- Order book build-up from infrastructure projects
- Working capital management improvements
- Technical price action: Holding above ₹65-70 support zone would confirm bullish reversal
My 2 Cents:
NSE:JTLIND presents an interesting technical setup following the breakout from a prolonged downtrend, supported by a major order win and improving operational metrics. The stock's 15x volume spike and 20% upper circuit rally suggest strong institutional interest resuming after extended consolidation at the ₹50-55 base.
From a sectoral perspective, the company is well-positioned to benefit from India's infrastructure boom, power transmission expansion, and robust steel demand growth. The recent PSTCL order validates its competitive capabilities in the high-value transmission infrastructure segment.
Full Coverage on my Mid-Week Newsletter coming Wednesday.
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As per the Latest SEBI Mandate, this isn't a Trading/Investment RECOMMENDATION nor for Educational Purposes; it is just for Informational purposes only. The chart data used is 3 Months old, as Showing Live Chart Data is not allowed according to the New SEBI Mandate.
Disclaimer: "I am not a SEBI REGISTERED RESEARCH ANALYST AND INVESTMENT ADVISER."
This analysis is intended solely for informational purposes and should not be interpreted as financial advice. It is advisable to consult a qualified financial advisor or conduct thorough research before making investment decisions.
