MOSL: JSW STEEL (Buy)-Higher realization offsets cost pressure-Charting growth plans
​JSW Steel: Higher realization offsets cost pressure; Charting growth plans; Maintain Buy
(JSTL IN, Mkt Cap USD7.7b, CMP INR207, TP INR241, 16% Upside, BUY)
- JSW Steel’s (JSTL) 4QFY17 cons. EBITDA grew 10% QoQ to INR31.6b (9% beat), led by an increase in volumes. Adj. PAT rose 39% QoQ to INR10.1b (est. of INR7.1b) on lower depreciation and effective tax rate (28% v/s 33% in 3QFY17). Net debt (incl. acceptances) declined ~INR22b QoQ/flat YoY to ~INR515b.
- S/A sales grew 9% QoQ/21% YoY to 3.96mt, driven by an increase in exports. Exports doubled QoQ to 1.43mt, representing 36% of sales.
- S/A EBITDA/t was down marginally QoQ at INR7,586, as higher realization (INR3,159 QoQ) was offset by an increase in RM cost (INR3,200/t QoQ).
- Sales guidance is 15.5mt (up ~5% YoY) for FY18.
- Charting growth plans: JSTL will expand Dolvi plant’s capacity from 5mt to 10mt by Mar-20, taking the company’s total capacity to ~23mt. The brownfield expansion at specific capex of USD0.5b/t (overall INR150b) is less than half of recent/ongoing greenfield expansions in India (Exhibit 7). Downstream capacities would be expanded at capex of INR32b, improving value-add mix. Upgrading, mining and sustenance capex is INR86b. Total capex plan is INR268b over FY18-21
JSW Steel Limited is a holding company. The Company is engaged in the business of production and distribution of iron and steel products. Its segments include Steel; Power (used mainly for captive consumption), and Others, which includes cement, mining and construction activities. Its product portfolio in flat and long steel products includes hot rolled (HR) coils, sheets and plates; cold rolled coils and sheets; galvanized products; galvalume products; non-grain oriented electrical steel (CRNGO); pre-painted galvanized products (color coated sheets/coils); pre-painted galvalume products; wire rods; special steel bars/wires; rounds and blooms, and angles. Its color coated products include JSW Pragati, JSW Colouron and JSW Colouron+. Its galvanized products include JSW Vishwas and GALVOS. It has plants in over six locations in India, including Vijayanagar in Karnataka, Salem in Tamil Nadu, and Tarapur, Vasind, Kalmeshwar and Dolvi in Maharashtra.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.