MOSL: JINDAL STEEL & POWER (Buy)-In-line-JPL delivers strong operating performance-Steel margins are inching up
​Jindal Steel & Power: In-line; JPL delivers strong operating performance; Steel margins are inching up
(JSP IN, Mkt Cap USD2.0b, CMP INR140, TP INR194, 39% Upside, Buy)
- Jindal Steel and Power's (JSP) 1QFY18 consolidated EBITDA grew 37% YoY (-13% QoQ) to INR13.5b (in-line). Interest cost rose 4% QoQ to INR9b due to an increase in Libor. Cash profit was INR5.4b (v/s cash loss of INR3.2b in 1QFY17). Net debt was unchanged QoQ, despite an increase in working capital.
- Standalone (S/A) margins were stable: EBITDA grew 14% YoY to INR7.5b, a miss of 6% due to volumes. Sales grew 4% YoY to 810kt (est. of ~860kt). There was an increase in inventory due to GST implementation. Pellet sales declined 21% QoQ to 610kt, as exports were hurt by weak prices. EBITDA per ton declined INR676 QoQ to INR9253, on expected line.
- Jindal Power delivered strong operating performance: EBITDA rose 23% QoQ (157% YoY) to INR4.7b on 11pp QoQ increase in PLF to 43%. JPL benefited from seasonally strong demand in the merchant market.
- Global ventures (GV): Oman continues to deliver strong EBITDA, which was unchanged QoQ at USD32m. EBITDA from other GVs turned negative because Wollongong mining was shut on contractor insolvency.
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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