MOSL: JINDAL STEEL & POWER (Buy)-In-line-steel production at inflection-Long product prices and operating leverage to drive margins
Jindal Steel & Power: In-line; steel production at inflection; Long product prices and operating leverage to drive margins; Buy
(JSP IN, Mkt Cap USD3.8b, CMP INR266, TP INR361, 36% Upside, Buy)
Jindal Steel & Power (JSP) exhibited a material improvement in its 3QFY18 performance. Consolidated EBITDA increased 17% QoQ (+26% YoY) to INR16b (est. of INR15.5b), led by an improvement in the steel business in India and Oman. Cash profit (before tax w/back) increased 43% QoQ (+45% YoY) to INR6.4b. Net debt declined INR27b QoQ to INR424b on working capital release and sale/lease back of the oxygen plant.
3QFY18 highlights:
- India: Steel production increased 17% QoQ (+15% YoY) to 970kt. Sales rose 13% QoQ (+12% YoY) to940kt. Spreads increased 2% QoQ, leading to an increase in EBITDA/t by 4% to ~INR9,800/t. New BOF started in Dec -2017.
- Oman: Steel production and sales increased 35% YoY to 420kt. EBITDA rose 192% YoY (+15% QoQ) to USD63m and EBITDA/t increased 120% YoY to USD150/t (+20% QoQ).
- Jindal Power: PLF increased 23% QoQ (+27% YoY) to 40%. Although average NSR increased 9% QoQ to INR4.3/kwh, EBITDA/kwh declined 16% QoQ to INR1.3/kwh on higher fixed transmission charges and coal 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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