Jindal Steel & Power
BSE SENSEX
28,797
Bloomberg
Equity Shares (m)
M.Cap.(INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val, (INR m)
Free float (%)
S&P CNX
8,867
JSP IN
914.9
77.9 / 1.2
98 / 48
1/19/24
908
38.1
10 September 2016
1QFY17 Results Update | Sector: Metals
CMP: INR85
TP: INR88 (+4%)
Neutral
Coking coal prices boosting earnings outlook
Consolidated EBITDA declined 3% YoY (+10% QoQ) to INR9.8b (v/s our estimate of
INR8.6b) due to lower steel sales volumes. Adj. for impairment charge of INR6.3b,
the company recorded net loss of ~INR4.6b, higher than loss of INR3.4b in 1QFY16,
due to higher depreciation and interest.
1QFY17: Shutdown impacts volumes; Oman EBITDA doubles YoY
Standalone (SA) steel sales volumes fell 8% YoY (-23% QoQ) to 780kt due to
shutdown. Pellet sales jumped 7x YoY to 700kt on attractive exports market.
SA steel-only EBITDA/t increased ~INR1,100 QoQ to INR7,435 on higher steel
prices. S/A EBITDA declined 2% QoQ to ~INR6.6b due to lower volumes.
Jindal Power (JPL) PLF declined 300bp QoQ to 29%. EBITDA/kWh improved 50%
QoQ to INR0.9 on account of commencement of 200MW Kerala PPA.
Other subsidiaries’ EBITDA rose 6% YoY (+45% QoQ) to INR3.2b, led by Oman.
Oman EBITDA was up 2x YoY to INR2.2b driven by steel prices.
Networth more than doubled, boosted by ~INR208b on revaluation of land,
plant, machinery and buildings. Hence, depreciation was higher. Net debt was
broadly flat QoQ at ~INR464b.
Coking coal prices boosting earnings outlook
We are increasing consolidated FY17E EBITDA by 9% to INR50b on improved
margins at Oman. Coking coal market has tightened and prices have nearly doubled
in a short period, which has improved viability of its overseas mining assets. Higher
coking coal prices will support steel prices, while Oman is insulated from energy
input price risk. Pellet exports too are driven by tight coking coal market. JPL’s PLF
is estimated to improve on Kerala PPA. SA earnings will be driven by volume pick-
up in the second half, while margins will be stable despite steel price increase.
We continue to value the stock on asset-based approach (Exhibit 8) because of
underutilized power assets in the near term and investment in under-construction
steel project. We are raising TP to INR88/share (earlier: INR75). Maintain
Neutral.
Financials & Valuations (INR b)
Y/E Mar
2016 2017E 2018E
Sales
194.7 214.6 216.4
EBITDA
34.4
50.4
50.3
Adj. PAT
-16.7 -16.7
-8.0
Adj. EPS (INR)
-18.2 -18.2
-8.7
EPS Gr(%)
-363.0
0.2 -52.1
BV/Sh. (INR)
198.4 179.7 170.5
RoE (%)
-8.5
-9.6
-5.0
RoCE (%)
1.2
2.3
3.7
P/E (x)
-4.7
-4.7
-9.7
P/BV
0.4
0.5
0.5
Estimate change
TP change
Rating change
Quarterly Performance (Consolidated)
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Sanjay Jain
(SanjayJain@MotilalOswal.com); +91 22 3982 5412
Dhruv Muchhal
(Dhruv.Muchhal@MotilalOswal.com); +91 22 3027 8033

Jindal Steel & Power
Exhibit 1: Quarterly performance (standalone)
Y/E March
Net Sales
Change (YoY %)
EBITDA
As % of Net Sales
Interest
Depreciation
Other Income
PBT (before EO item)
Extra-ordinary Income
PBT (after EO item)
Total Tax
% Tax
Reported PAT
Adjusted PAT
Change (YoY %)
JPL PAT
Adj consol PAT
Change (YoY %)
1Q
34,527
-3.7
7,104
20.6
6,909
5,010
540
-4,276
0
-4,276
-1,603
37.5
-2,673
-2,673
-187.3
260
-3,393
-181.1
FY16
2Q
3Q
34,964 31,763
2.0
-13.2
6,331 4,230
18.1
13.3
6,756 6,583
2,488 3,940
91
10
-2,823 -6,283
0
0
-2,823 -6,283
-786 -2,262
27.9
36.0
-2,037 -4,021
-2,037 -4,021
-170.9 -442.1
450
380
-1,785 -6,645
-140.4 -381.1
4Q
36,611
5.8
6,727
18.4
6,459
3,483
0
-3,215
0
-3,215
-1,757
54.6
-1,458
-1,458
-31.9
-2,120
-4,840
4.6
1Q
31,604
-8.5
6,593
20.9
6,010
4,891
0
-4,308
0
-4,308
-1,542
35.8
-2,766
-2,766
3.5
-2,170
-4,564
34.5
FY17
FY16 FY17E
2QE
3QE
4QE
37,231 38,626 39,348 137,865 146,809
6.5
21.6
7.5
-2.5
6.5
8,159 8,394
8,386 24,392 31,533
21.9
21.7
21.3
17.7
21.5
6,487 6,501
6,514 26,708 25,512
3,439 3,417
3,395 14,921 15,142
95
10
1,311
640
1,416
-1,672 -1,513
-212 -16,597 -7,705
0
0
0
0
0
-1,672 -1,513
-212 -16,597 -7,705
0
0
0 -6,409 -1,542
0.0
0.0
0.0
38.6
20.0
-1,672 -1,513
-212 -10,189 -6,164
-1,672 -1,513
-212 -10,189 -6,164
-17.9
-62.4
-85.4
P to L
-1,145
-638
-638 -1,106 -4,592
-4,248 -3,606 -2,047 -16,662 -14,466
137.9
-45.7
-57.7 -363.0
-13.2
(INR million)
FY17 vs Est
1QE
(%)
33,117
-5
-4.1
7,042
-6
21.3
6,473
-7
3,461
41
567 -100
-2,325
85
0
-2,325
85
0
0.0
-2,325
19
-2,325
19
-13.0
-760
186
-5,933
-23
74.9
Source: MOSL, Company
Exhibit 2: Quarterly performance (Jindal Power)
Y/E March
Capacity
PLF
Gross generation (MU)
Est. Power sales (MU)
Net Sales
(INR/kwh)
EBITDA
(INR/kwh)
Reported PAT
1Q
3,400
25%
1,875
1,716
6,100
3.56
1,700
1.0
260
FY16
2Q
3Q
3,400 3,400
37%
35%
2,728 2,580
2,496 2,361
8,890 8,150
3.56
3.45
1,680 1,860
0.7
0.8
450
380
4Q
3,400
32%
2,358
2,158
7,010
3.25
1,360
0.6
-2,120
1Q
3,400
29%
2,171
1,997
6,680
3.34
1,820
0.9
-2,170
FY17
2QE
3QE
3,400
3,400
42%
49%
3,110
3,635
2,838
3,324
8,666 10,021
3.05
3.01
2,922
3,429
1.0
1.0
-1,145
-638
FY16
4QE
3,400
49%
3,635
3,324
10,021
3.01
3,429
1.0
-638
3,400
31%
9,218
8,852
26,701
3.02
7,599
0.9
-1,106
INR million
FY17E
3,400
42%
12,552
11,484
35,388
3.08
11,599
1.0
-4,592
FY17 vs Est
1QE
(%)
3,400
0
30%
2,203
-1
2,011
-1
6,020
11
2.99 11.7
1,450
25
0.7 26.3
-760
186
Source: MOSL, Company
Steel production volumes
were down 13% QoQ to
840kt on shutdown.
Exhibit 3: Standalone steel production and sales - kt
Steel product sales
Steel product production
Source: MOSL, Company
10 September 2016
2

Jindal Steel & Power
Exhibit 4: Implied standalone steel EBITDA and cost per ton - INR
EBITDA per ton (INR 000)
32
20
23
25
Cost per ton (INR 000)
33 33
30
30 30
30 32 31 29 28 29 28
28
28
27
27
26 25 26
26 24
25
24 22
7
4 6
EBITDA/t was up ~INR1,100
QoQ to INR7,435 on higher
steel prices offset partly by
negative operating
leverage.
22
17 15 16
14 15 13
14 16 16 14 13
12
12 11 13 11 14 13 13
12
10
9
8 8 7
9
Source: MOSL, Company
Pellet production increased
43% YoY to 1,560kt on
export opportunities.
Exhibit 5: Pellet production and sales - kt
production
Sales
226
347
526 464
658
623 658 551 639
525
395 436
320
700
118
241
0
398
51 94
179
290
Source: MOSL, Company
JPL’s EBITDA/kWh improved
on start of Kerala PPA –
better realization and lower
cost from linkage coal.
Exhibit 6: Jindal Power PLF (%) and EBITDA (INR/kWh)
PLF (%)
2.00
2.01
1.65
1.36
0.99
0.67
0.79
0.63
0.91
EBITDA (INR/kWh)
Source: MOSL, Company
Refinancing of only INR51b
debt at Mauritius is
pending. Of this, INR13b is
already overdue.
Exhibit 7: Entity wise debt
Standalone
Jindal Power
Overseas
Mauritius
Oman
Australia
Others
Total
INR billion
250
82
112
51
34
27
20
464
Source: MOSL, Company
10 September 2016
3

Jindal Steel & Power
Exhibit 8: Asset based valuation
Business
Capacity Fair market value
assuming normalized margins
(INR m)
332,415
mtpa EBITDA/t
3.3
7,000
1.5
7,000
1.5
3.0
MW
4,320
4,000
1,000
EBITDA
22,750
10,500
6,000
3,000
INR m/MW
49
Multiple
6.5
6.5
6.5
147,875
68,250
56,857
39,000
0
20,433
212,143
212,143
544,558
463,928
80,630
88
A. Steel
Raigarh
Angul Steel
CWIP
Shadeed, Oman
Overseas mining
Tensa iron ore mines
B. Power
Tamnar
Total EV (A+B)
Less: Net debt
Equity Value
Equity value (INR/share)
Source: MOSL, Company
Exhibit 9: Earnings based valuation
YEAR
Steel Business
A. EBITDA
B. Target EV/EBITDA(x)
C. EV (AxB)
Jindal Power (JPL)
D. PV of JPL's FCFF
Consolidated
EBITDA
E. Enterprise Value (C+D)
F. Net Debt
G. CWIP
H. Discount on CWIP (%)
Equity Value (E-F+G*(1-H%))
Target price (INR/share)
FY16
26,811
6.5
174,274
126,197
34,410
300,471
463,928
118,266
FY17E
38,798
6.5
252,188
129,618
50,397
381,806
483,388
128,052
FY18E
35,373
6.5
229,925
131,811
50,262
361,735
484,403
128,052
26,471
5,385
29
6
Source: MOSL, Company
10 September 2016
4

Jindal Steel & Power
Exhibit 10: Summary financials – INR m
Y/E March
Net sales
Steel business (incl. CPP)
Standalone
Steel sales (kt)
Pellet sales (kt)
Shadeed
HBI (kt) production
Steel (kt) sales
Wollongong (GNM)
Coking coal (kt)
Others
Jindal power
Sales (Mkwh)
EBITDA
Steel business (incl. CPP)
(a) Standalone
EBITDA/t of steel
(b) Global Venture
1. Shadeed
EBITDA/t of HBI
2. Wollongong (GNM)
EBITDA/t of coal
3. Others
Jindal Power
EBITDA (INR/kwh)
Depn. & Amortization
EBIT
Net Interest
Other income
PBT before EO
Adjusted PAT
Change (%)
FY13
198,068
172,971
149,547
2,843
2,112
29,012
1,520
FY14
200,040
175,473
145,440
2,935
2,035
32,621
1,468
FY15
201,592
169,312
140,994
2,930
411
31,243
1,420
534
466
171
-3,391
32,280
8,969
54,598
37,618
37,057
12,646
561
7,235
5,096
-2,794
-3,879
16,980
1.9
27,328
27,270
25,837
2,256
3,689
6,335
-66.8
FY16
194,673
167,972
137,865
3,380
962
26,439
1,509
1,050
1,065
304
2,603
26,701
8,852
34,410
26,811
24,392
7,216
2,420
4,057
2,688
-196
-644
-1,441
7,599
0.9
28,194
6,216
32,808
2,200
-24,391
-16,662
-363.0
FY17E
214,633
179,245
146,809
4,240
700
34,542
1,500
1,200
819
0
-2,925
35,388
11,484
50,397
38,798
31,533
7,437
7,266
8,497
5,665
-79
FY18E
216,383
175,633
151,656
4,585
0
26,082
1,500
1,200
819
400
-2,925
40,750
13,298
50,262
35,373
33,250
7,252
2,123
3,064
2,042
-18
-5,588
25,097
7,411
65,685
47,773
45,126
15,872
2,647
4,903
3,226
-2,588
24,568
7,568
57,764
40,941
37,420
12,747
3,522
3,404
2,318
-2,256
17,912
2.4
15,392
50,293
7,582
1,364
44,076
34,842
-14.2
117
16,823
2.2
18,292
39,472
15,008
656
25,120
19,104
-45.2
-1,153
-922
11,599
14,889
1.0
1.1
34,901
26,191
15,496
24,071
34,541
34,163
-152
120
-19,197
-9,972
-16,691
-8,002
0.2
-52.1
Source: MOSL, Company
10 September 2016
5

Jindal Steel & Power
Financials and Valuations
Income Statement (Consolidated)
Y/E March
Net sales
Change (%)
Total Expenses
EBITDA
% of Net Sales
Depn. & Amortization
EBIT
Net Interest
Other income
PBT before EO
EO income
PBT after EO
Current tax
Deffered tax
Tax
Rate (%)
Reported PAT
Minority interests
Share of Associates
Adjusted PAT
Change (%)
Balance Sheet (Consolidated)
Y/E March
Share Capital
Reserves
Net Worth
Minority Interest
Total Loans
Deferred Tax Liability
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Capital WIP
Good will
Investments
Curr. Assets
Inventory
Account Receivables
Cash and Bank Balance
Loans & advances and others
Curr. Liability & Prov.
Account Payables
Provisions & Others
Net Current Assets
Appl. of Funds
E: MOSL Estimates
2012
182,086
38.9
113,218
68,868
37.8
13,865
55,003
3,600
1,419
52,822
-936
51,886
9,999
1,865
11,863
22.9
40,023
574
200
40,585
8.1
2012
935
180,176
181,111
3,071
170,908
11,920
367,010
223,301
58,360
164,940
136,520
918
3,776
143,922
35,795
13,068
1,492
93,567
83,066
29,110
53,956
60,856
367,010
2013
198,068
8.8
132,383
65,685
33.2
15,392
50,293
7,582
1,364
44,076
-5,741
38,335
7,772
1,446
9,218
24.0
29,116
417
402
34,842
-14.2
2013
935
211,588
212,523
5,573
246,182
13,365
477,642
267,032
74,285
192,747
192,303
1,543
8,089
176,046
45,242
19,541
2,001
109,262
93,084
31,360
61,724
82,962
477,642
2014
200,040
1.0
142,276
57,764
28.9
18,292
39,472
15,008
656
25,120
0
25,120
4,946
1,236
6,182
24.6
18,938
-140
26
19,104
-45.2
2014
915
225,191
226,105
10,802
363,682
14,727
615,316
466,646
122,687
343,959
178,112
5,930
3,418
209,301
48,812
17,724
10,153
132,612
125,405
49,192
76,212
83,896
615,316
2015
201,592
0.8
146,994
54,598
27.1
27,328
27,270
25,837
2,256
3,689
-19,116
-15,428
-705
-176
-882
5.7
-14,546
-1,738
26
6,335
-66.8
2015
915
209,506
210,421
8,573
455,007
20,185
694,185
612,235
151,286
460,949
90,728
5,485
17,852
180,353
48,487
16,907
11,391
103,568
61,181
38,391
22,790
119,172
694,185
2016
194,673
-3.4
160,263
34,410
17.7
28,194
6,216
32,808
2,200
-24,391
-2,358
-26,750
-6,763
0
-6,763
25.3
-19,987
-980
-14
-16,662
-363.0
2016
915
180,556
181,471
8,003
470,132
13,477
673,082
627,116
178,233
448,883
118,266
5,485
3,577
159,182
32,360
14,292
6,204
106,326
62,310
42,186
20,124
96,872
673,082
2017E
214,633
10.3
164,235
50,397
23.5
34,901
15,496
34,541
-152
-19,197
0
-19,197
105
-303
-198
1.0
-18,999
-1,906
402
-16,691
0.2
2017E
915
163,463
164,378
6,097
495,132
13,174
678,780
634,129
213,134
420,995
128,052
5,485
3,577
189,014
51,118
19,826
11,744
106,326
68,343
48,219
20,124
120,671
678,780
(INR Million)
2018E
216,383
0.8
166,120
50,262
23.2
26,191
24,071
34,163
120
-9,972
0
-9,972
105
5
110
-1.1
-10,082
-1,678
402
-8,002
-52.1
(INR Million)
2018E
915
155,059
155,974
4,418
495,132
13,179
668,703
650,929
239,325
411,604
128,052
5,485
3,577
188,652
51,745
19,852
10,729
106,326
68,667
48,543
20,124
119,986
668,703
10 September 2016
6

Jindal Steel & Power
Financials and Valuations
Ratios (Consolidated)
Y/E March
Basic (INR)
EPS
Cash EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
Cash P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)
Return Ratios (%)
RoE
RoCE (pre-tax)
RoIC (pre-tax)
Working Capital Ratios
Fixed Asset Turnover (x)
Asset Turnover (x)
Inventory (Days)
Debtor (Days)
Payable (Days)
Work.Cap.Turnover (Days)
Leverage Ratio (x)
Debt/Equity
Cash Flow Statement (Consolidated)
Y/E March
EBITDA
Non cash exp. (income)
(Inc)/Dec in Wkg. Cap.
Tax Paid
CF from Op. Activity
(Inc)/Dec in FA + CWIP
(Pur)/Sale of Investments
Acquisition in subsidiaries
Loans and advances
Int. & Dividend Income
Other investing activities
CF from Inv. Activity
Equity raised/(repaid)
Debt raised/(repaid)
Dividend (incl. tax)
Interest paid
Other financing
CF from Fin. Activity
(Inc)/Dec in Cash
Add: opening Balance
Closing Balance
E: MOSL Estimates
2012
43.4
57.6
193.7
1.6
3.8
2013
37.2
47.6
227.3
1.6
4.4
2014
20.9
40.7
247.1
1.6
7.9
2015
6.9
14.0
230.0
1.6
27.0
12.3
6.1
0.4
2.6
9.6
1.9
25.2
17.2
26.5
0.6
0.5
71.8
26.2
58.4
32.6
0.9
17.7
12.3
20.2
0.5
0.4
83.4
36.0
57.8
40.9
1.1
8.8
7.3
11.4
0.4
0.3
89.1
32.3
89.8
36.9
1.6
2.9
4.5
5.5
0.4
0.3
86.2
34.2
73.8
53.5
2.1
2016
(18.2)
9.0
198.4
0.0
0.0
(4.7)
9.5
0.4
2.8
15.7
0.0
(8.5)
1.2
1.1
0.3
0.3
87.6
33.3
81.8
46.6
2.6
2017E
(18.2)
17.4
179.7
0.0
0.0
(4.7)
4.9
0.5
2.6
11.1
0.0
(9.6)
2.3
2.9
0.4
0.3
86.9
33.7
82.0
50.8
2.9
2018E
(8.7)
17.6
170.5
0.0
0.0
(9.7)
4.8
0.5
2.6
11.2
0.0
(5.0)
3.7
4.6
0.4
0.3
87.3
33.5
81.9
50.5
3.1
(INR Million)
2018E
50,262
-330
-105
49,828
-16,800
2012
68,868
1,160
-20,385
-10,421
39,221
-60,604
19
-653
1,142
-4,627
-64,723
38
33,044
-1,925
-9,193
389
22,354
-3,148
4,640
1,492
2013
65,685
628
-23,207
-7,884
35,223
-84,012
-3,405
120
-9,676
1,068
80
-95,825
0
75,274
-1,569
-15,713
3,120
61,111
509
1,492
2,001
2014
57,764
-2,456
12,816
-8,337
59,786
-141,525
4,898
-4,312
-1,797
1,805
494
-140,437
-3,986
115,838
-1,488
-21,775
212
88,802
8,152
2,001
10,153
2015
54,598
-21,600
-18,154
-3,393
11,451
-50,964
-13,430
367
0
1,003
-2,341
-65,365
5
90,704
-1,448
-34,381
271
55,151
1,238
10,153
11,391
2016
34,410
-4,581
11,762
-170
41,422
-39,500
15,904
1,052
-1,337
2,292
1,699
-19,889
0
9,230
-8
-35,941
0
-26,719
-5,187
11,391
6,204
2017E
50,397
-18,260
-105
32,033
-16,800
-152
-16,952
25,000
0
-34,541
-9,541
5,540
6,204
11,744
120
-16,680
0
0
-34,163
-34,163
-1,015
11,744
10,729
10 September 2016
7

Jindal Steel & Power
Corporate profile
Company description
Exhibit 1: Sensex rebased
Jindal Steel & Power (JSP) has steel-making capacity
of 3mtpa at Raigarh, 1.5mtpa at Angul and 2mtpa at
Shadeed Oman. Its assets are spread over various
mineral-rich countries. JSPL has captive iron ore
mines. JSP has set up 3400MW power asset in at
coal pit head in Chhattisgarh. It also has multiple
coal resources overseas, mainly in Mozambique,
South Africa, Australia and Indonesia.
Source: MOSL/Bloomberg
Exhibit 2: Shareholding pattern (%)
Jun-16
Promoter
DII
FII
Others
61.9
1.7
19.7
16.8
Mar-16
61.9
2.8
18.3
17.0
Jun-15
61.3
2.7
19.2
16.8
Source: Capitaline
Exhibit 3: Top holders
Holder Name
Valiant Mauritius Partners Offshore Limited
Valiant Mauritius Partners Limited
HSBC Pooled Investment Fund A/C HSBC
Pooled Investment Fund- HSBC Pooled Asia
Pacific Exjapan Equity
HSBC Global Investment Funds A/C HSBC GIF
Mauritius Limited
Swiss Finance Corporation (Mauritius) Ltd
% Holding
2.5
2.1
1.7
1.5
1.3
Source: Capitaline
Note: FII Includes depository receipts
Exhibit 4: Top management
Name
Naveen Jindal
Savitri Jindal
Ravi Uppal
Jagdish Patra
Designation
Chairman
Chairman Emeritus
Managing Director & Group CEO
Company Secretary
Exhibit 5: Directors
Name
Arun K Purwar*
Arun Kumar*
Dinesh Kumar Saraogi
H Khaitan*
Hardip Singh wirk*
Naveen Jindal
R V Shahi*
Name
Rajeev Bhaduaria
Ravi Uppal
S K Garg*
Savitri Jindal
Shalil Mukund Awale
Shallu Jindal
Source: Capitaline
*Independent
Exhibit 6: Auditors
Name
Lodha & Co
Ramanath Iyer & Co
RSMV & Co
Type
Statutory
Cost Auditor
Secretarial Audit
Exhibit 7: MOSL forecast v/s consensus
EPS
(INR)
FY18
MOSL
forecast
-18.2
-8.7
Consensus
forecast
-6.4
4.9
Variation
(%)
185.7
-277.9
Source: Bloomberg
FY17
Source: Capitaline
10 September 2016
8

Jindal Steel & Power
NOTES
10 September 2016
9

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Jindal Steel & Power
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Disclosure of Interest Statement
Analyst ownership of the stock
Served as an officer, director or employee
JINDAL STEEL & POWER
No
No
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