MOSL: JINDAL STEEL & POWER (Buy)-DRI plant restart at Angul to aid growth
Jindal Steel & Power: DRI plant restart at Angul to aid growth
(JSP IN, Mkt Cap USD2.3b, CMP INR157, TP INR184, 17% Upside, Buy)
- We visited Jindal Steel and Power's (JSP) Angul plant. Production ramp-up at Angul continues and is the key driver of volume growth this year (up 12% YoY in 1HFY20).
- The next leg of growth at Angul is expected to be driven by recommencement of production at the 1.8mtpa DRI plant (by end-Dec'19), which would use the rich gas produced by the coke oven batteries. The fourth unit of the 500ktpa coke oven battery has also been commissioned, which will supply coke to Raigarh, substituting purchased coke.
- Management remains focused on deleveraging through FCF and monetization of overseas assets. FCF generation should be strong with the focus on sweating existing assets and limited growth capex currently. The stock is trading attractively at FY21 cash P/E of 4x. Maintain Buy.
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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