Shares of JSW Infrastructure Ltd. were trading with losses on Wednesday, October 7, breaking a five-day winning streak after global banking firm HSBC downgraded the stock to "Reduce" from its earlier rating of "Hold" and set a target price of ₹310, among the lowest on the Street.
HSBC's target implies a downside potential of 15% for shares of JSW Infra, when compared to Tuesday's closing price of ₹363.05. The global banking firm in its note said that although JSW Infrastructure's shares have rallied 27% year-to-date, it sees risks from the company's capex-led growth strategy.
According to HSBC, higher capital expenditure could dilute return on invested capital and increase execution risks. It went on to add that the rally seen in the stock so far leaves little room for any execution risks in the future. HSBC expects resilient cargo volumes in India to offset the disruption at Fujairah, but said slower project ramp-up is likely to weigh on earnings.
It has consequently cut JSW Infra's Earnings Before Interest Tax Depreciation and Amortisation estimates by 4%-7% for financial year 2027-2029. Instead of JSW Infra, HSBC said it prefers shares of Adani Ports and Special Economic Zone , which it rates a "Buy", citing its superior Return On Invested Capital and valuation.
Street view and stock reactionDespite HSBC's bearish call, the broader analyst view on JSW Infrastructure remains positive. Among 19 analysts covering the stock, 15 have a "Buy" rating, one recommends "Hold", while three carry a "Sell" rating. The 12-month consensus target price is ₹369.42, implying around 2% upside from the current trading price.
Shares of JSW Infra fell as much as 3% to an intraday low of ₹351.05, but are looking to recover from the lows of the day, currently trading 1.4% lower at ₹358.2. The stock is up 27% so far this year. Shares of Adani Ports are now trading 0.5% lower on Wednesday at ₹1,774.
The stock has underperformed JSW Infra so far this year, gaining 20% so far.