MOSL: Jindal Steel and Power (Buy) - Steel business exhibiting strong operating performance
Jindal Steel and Power: Steel business exhibiting strong operating performance; Some headwinds in power: Maintain Buy
(JSp IN, Mkt Cap USD3.4b, CMP INR262, TP INR349, 34% Upside, Buy)
- 4QFY18 consol. EBITDA grew 38% YoY (+33% QoQ) to INR21.4b (est. of INR19.5b), led by strong growth in steel volumes and higher steel margins. Adj. PAT turned positive to INR1.3b (est. of a loss of INR1.2b). Interest cost rose 24% YoY to INR10.7b, despite net debt declining by INR35b to INR420b.
- FY18 consol. EBITDA increased 39% YoY to INR65b and adj. loss after tax reduced from INR19b to INR8b. Cash profit more than doubled to INR26b.
- Standalone: Steel sales increased 26% QoQ (28% YoY) to 1.18mt. EBITDA per ton rose 31% QoQ to INR12,871, largely driven by higher spreads and some benefit of operating leverage. EBITDA increased 66% YoY to INR15.2b.
- Oman: Steel sales increased 14% QoQ (+23% YoY) to 480kt. EBITDA per ton was flat QoQ (+80% YoY) at USD148/t. EBITDA increased 119% YoY to INR4.7b.
- Jindal Power: Generation declined 1% YoY to 2.3b Kwh. Realization was higher by 12% YoY at INR4.48/kWh. EBITDA declined 31% YoY to INR2.6b (est. of INR1.8b) due to higher input cost.
Jindal Steel & Power is engaged in the manufacture of rails, parallel flange beams and columns, plates and coils, angles and columns, rebars, wire rods, fabricated secions, speedfloor, semi-finished products, power, minerals and sponge iron.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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