MOSL: JINDAL STEEL & POWER (BUY)-Strong performance across businesses-Efficient cash management and Angul expansion
​JINDAL STEEL & POWER: Strong performance across businesses; Efficient cash management and Angul expansion driving value; Buy
(JSP IN, Mkt Cap USD1.6b, CMP INR111, TP INR184, 66% Upside, Buy)
- Jindal Steel and Power (JSP) had a strong 4QFY17, on expected lines. Consolidated EBITDA grew 73% YoY (and 22% QoQ) to INR15.5b. Adjusted PAT loss of INR3b was down from INR4.1b in 3QFY17. For FY17, EBITDA grew 35% to INR46.6b, but adjusted PAT loss increased from INR16.6b in FY16 to INR19.1b on higher depreciation due to revaluation of assets. 4Q performance by business:
- Standalone: EBITDA grew 17% QoQ to INR9.1b on higher sales (+10% QoQ to 920kt) and margins (+INR597/t QoQ to INR9,929/t). The BOF at Angul is on track for commissioning by October 2017 (earlier August). With the expansion at Angul, steel capacity will increase to ~8mt, driving strong volume growth.
- Jindal Power: EBITDA grew 26% QoQ to INR3.8b (ex-one-off to INR3.3b) as Coal India formalized its grade slippage issue, driving cost savings. The savings on account of quality of coal would be recurring in nature.
- Oman: EBITDA grew 52% QoQ/2x YoY to INR2.2b, driven by higher spreads (+USD29/t QoQ; +USD50/t YoY) to USD85/t and highervolumes. The new rebar mill operated at 65-70% utilization and should drive margin improvement.
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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