25 July 2020
1QFY21 Results Update | Sector: Metals
JSW Steel
Estimate change
TP change
Rating change
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CMP: INR205
TP: INR242 (+18%)
Weak domestic demand impacts profitability
Buy
Expected price hikes to improve margins
JSW Steel’s (JSTL) 1QFY21 results reflect the adverse impact of COVID-19 on
steel demand and prices as consol. EBITDA declined 55% QoQ to INR13.4b.
We expect an increase in domestic steel prices, supported by improving
domestic demand and international prices which should improve margins in
2QFY21. We maintain our FY21E/FY22E estimates. Maintain
Buy.
In-line; Lower volumes and realizations lead to EBITDA decline
JSTL’s consol. EBITDA was down 64% YoY (+55% QoQ) to INR13.4b (v/s est.
INR13.0b) on lower volumes and realizations. It reported loss of INR5.6b
(v/s profit of INR10.4b in 4QFY20 and est. loss of INR5.3b).
Standalone (S/A) business suffered from weak domestic sales (down 58%
YoY), forcing higher exports (up 133% YoY). Overall volumes still declined
25% YoY to 2.8mt (v/s est. 2.6mt).
Realization declined 11% QoQ to INR36,892/t (v/s est. INR36,789/t) due to
weaker mix on account of higher exports (57% volumes v/s 13% in 4QFY20)
and adverse product mix (weaker auto demand, etc.).
EBITDA/t declined 41% QoQ to INR5,122/t (v/s est. INR5,545/t), due to
lower realization and negative operating leverage, which was offset by
lower iron ore cost and other operating costs.
Thus, standalone EBITDA declined 56% QoQ to INR14.3b (v/s est. INR14.4b).
Subsidiaries’ EBITDA loss shrunk to INR880m (v/s loss of INR2,450m in
4QFY20) on improved performance of Indian subsidiaries. However, loss
from JSTL’s three key overseas subsidiaries remained elevated at INR2.4b
(v/s loss of INR3.05b in 4QFY20).
Reported net debt increased by INR10b QoQ to INR545b. Net debt to
EBITDA stood at 5.74x.
Highlights from management commentary
JSTL has informed that there were moderate price hikes in Jul’20. The
company expects another round of price hikes in Aug’20. As a result, it
expects improved realizations during 2QFY21. It also expects to benefit
from lower coking coal prices to an extent of USD20-25/t of coking coal.
The company has operationalized all its four mines in Odisha during Jul’20
post finalization of contracts with MDOs and transporters. It has also
started dispatches from mines to Dolvi and Vijayanagar plants. It expects to
produce 1.2mt during Jul’20 and ~17mt in FY21.
JSTL has reiterated its FY21 production and sales guidance of 16.0mt and
15.0mt, respectively.
Reported net debt increased by INR10b during 1QFY21 to INR545b
(INR535b in end-FY20).
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
JSTL IN
2,417
495.3 / 6.8
297 / 133
-4/-16/-20
2158
Financials & Valuations (INR b)
Y/E MARCH
2020 2021E 2022E
Sales
726.1 668.2 884.1
EBITDA
111.6 111.6 177.9
Adj. PAT
21.7
20.2
53.8
EBITDA Margin (%)
15.4
16.7
20.1
Adj. EPS (INR)*
9.0
8.4
22.4
EPS Gr. (%)
-71.6
-7.0
167.0
BV/Sh. (INR)
152.5 159.1 179.7
Ratios
Net D:E
1.7
1.7
1.6
RoE (%)
6.1
5.4
13.2
RoCE (%)
4.5
4.2
7.4
Payout (%)
55.1
23.8
8.9
Valuations
P/E (x)
22.7
24.4
9.1
P/BV (x)
1.3
1.3
1.1
EV/EBITDA(x)
10.1
10.4
6.6
Div. Yield (%)
2.0
1.0
1.0
FCF Yield (%)
3.2
8.1
9.0
*Cons.
Shareholding pattern (%)
As On
Jun-20 Mar-20
Promoter
43.1
42.7
DII
5.4
4.9
FII
16.0
17.7
Others
35.5
34.7
FII Includes depository receipts
Jun-19
42.3
3.8
19.6
34.4
Amit Murarka - Research analyst
(Amit.Murarka@motilaloswal.com)
Basant Joshi - Research analyst
(Basant.Joshi@motilaloswal.com)
14
Oswal
2020
1
Motilal
January
research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.
 Motilal Oswal Financial Services
JSW Steel
Valuation and view – Strong project pipeline to drive growth
We like JSTL given its strong project pipeline and cost reduction initiatives. On the
domestic front, we expect the company to deliver above-industry volume growth in
FY22E, driven by expansion. Margins should also improve, aided by better product
mix. Any turnaround in its loss-making overseas operations could provide a further
upside.
In the near term, we expect JSTL to tide over the disruptions caused by the COVID-
19 pandemic, supported by higher exports, cost reductions, and capex curtailment.
Although net debt is expected to rise to INR677b in FY22E (from INR639b in FY20),
we expect it to decline subsequently as the capex phase ends and invested projects
start generating cash flows. We value JSTL at 7.0x FY22E EV/EBITDA to arrive at TP of
INR242/share. Maintain
Buy.
Quarterly performance (consolidated) – INR m
Y/E March
Net Sales
Change (YoY %)
EBITDA
Change (YoY %)
EBITDA (INR per ton)
EBITDA (USD per ton)
Interest
Depreciation
Other Income
PBT (before EO Item)
EO Items
PBT (after EO Item)
Total Tax
% Tax
Reported PAT
MI (Profit)/Loss
Share of P/(L) of Ass.
Adjusted PAT
Change (YoY %)
1Q
1,98,120
-3.4
37,160
-27.2
9,909
142
10,420
10,260
1,410
17,890
17,890
7,620
42.6
10,270
200
-190
10,280
-56.6
FY20
FY21E
FY20 FY21E
2Q
3Q
4Q
1Q
2QE
3QE
4QE
1QE
1,71,060 1,78,050 1,78,870 1,17,820 1,58,508 1,92,372 1,99,475 7,26,100 6,68,174 1,22,749
-20.6
-12.4
-20.0
-40.5
-7.3
8.0
11.5
-14.3
-8.0
-38.0
22,650 22,010 29,750 13,410 25,432 33,036 39,700 1,11,570 1,11,578 12,965
-53.8
-51.1
-33.0
-63.9
12.3
50.1
33.4
-41.1
0.0
-65.1
6,292
5,462
8,041
4,806
7,629
8,048
9,513
7,399
7,748
4,987
89
77
111
64
102
107
127
104
103
66
11,270 10,600 10,360 10,160 10,253 10,348 10,633 42,650 41,394 10,455
10,570 10,550 11,080 10,470 10,557 10,557 11,557 42,460 43,140 11,080
1,560
1,270
1,220
1,320
1,285
1,411
1,344
5,460
5,360
1,195
2,370
2,130
9,530 -5,900
5,907 13,543 18,854 31,920 32,404 -7,375
26,160
2,500
-8,050
20,610
28,530
4,630
1,480 -5,900
5,907 13,543 18,854 52,530 32,404 -7,375
3,020
2,490
-690
-610
2,083
4,363
5,926 12,440 11,762 -2,030
10.6
53.8
-46.6
10.3
35.3
32.2
31.4
23.7
36.3
27.5
25,510
2,140
2,170 -5,290
3,823
9,180 12,928 40,090 20,642 -5,345
240
240
430
210
280
290
303
1,110
1,083
278
-150
-270
-290
-530
-310
-350
-370
-900 -1,560
-225
809
234 10,360 -5,610
3,794
9,120 12,861 21,683 20,165 -5,292
-96.2
-98.6
-32.0 -154.6
368.9 3,792.2
24.1
-71.6
-7.0 -151.5
vs Est
(%)
-4
3
-4
-3
10
-20
-20
-70
-1
6
Conference call takeaways
1QFY21 insights:
The company operated at 80% capacity utilization during May-Jun’20.
Steel sales volumes declined 24% QoQ to 2.80mt due to the COVID-19
pandemic. Exports consisted 57% of volumes - 1.48mt (up ~200% QoQ).
Semis contributed 13% of sales volumes (v/s 4% in 4QFY20). Automotive sales
declined 50% to 0.2mt, in line with overall decline in passenger and commercial
vehicles.
Indian subsidiaries contributed EBITDA of INR1.7b (v/s INR2.3b QoQ) whereas
key overseas subsidiaries reported EBITDA loss of INR2.4b (v/s INR3.0b QoQ).
Net sales realizations declined by INR4,800 QoQ, due to lower prices, higher
exports and adverse product mix.
Raw material cost benefitted due to lower iron ore prices during the quarter.
Overall costs declined 4% QoQ.
25 July 2020
2
 Motilal Oswal Financial Services
JSW Steel
Near-term outlook and guidance:
Domestic steel inventories have declined QoQ on the back of higher exports,
which bode well for pricing in the domestic market.
The company expects domestic steel demand to improve gradually in 2QFY21.
As a result, it expects share of exports to remain low sequentially.
JSTL has informed that were moderate price hikes in Jul’20. It expects another
round of price hikes in Aug’20.
The company expects NSR to improve in 2QFY21 on the back of improved
product mix, lower exports and improved pricing.
On the cost front, it expects to benefit on coking coal costs to an extent of
USD20-25/t of coking coal and improved operating leverage.
The company has reiterated its FY21 production and sales guidance of 16.0mt
and 15.0mt, respectively.
The company expects positive EBITDA contribution from its overseas
subsidiaries from 4QFY21.
Update on iron ore mines:
The company operationalized all four mines in Odisha during Jul’20 post
finalization of MDOs and transporters. It has started dispatches from mines to
Dolvi and Vijayanagar plants. It expects to produce 1.2mt during Jul’20 and
~17mt in FY21.
It expects to operationalize three more mines in Karnataka during the quarter,
which would help the company produce ~7mt.
The company has paid upfront fees of INR12.9b toward mines in Odisha, which
would get offset against premium payable on iron ore extraction.
Capex and project update:
During 1QFY21, the company spent INR23.7b against its planned capex of
INR90b for FY21.
With improved availability of workforce at all locations, project execution work
has ramped up slowly.
The 8mtpa Pellet plant and Wire Rod mill at Vijayanagar are expected to be
commissioned in 2QFY21. The CRM1 complex capacity expansion at Vijayanagar
from 0.85MTPA to 1.80MTPA is expected to be commissioned progressively in
2QFY21 and 3QFY21, respectively.
The 5MTPA Dolvi expansion, including the captive power plant and coke oven
Phase 2, remain on track and is likely to get commissioned by end-FY21.
Similarly, downstream modernization cum capacity enhancement projects at
Vasind, Tarapur and Color coating line at Kalmeshwar are expected to be
commissioned in 2HFY21.
Liquidity Position:
Reported Net-debt increased by INR10b during 1QFY21 to INR545b (INR535b at
end-FY20).
Revenue acceptances stood at USD1,307m whereas capital acceptances stood at
USD364m.
Net Debt/EBITDA stood at 5.74x at end-1QFY21 (v/s 4.5x at end-FY20).
The company had liquidity of INR87.5b at end-1QFY21.
25 July 2020
3
 Motilal Oswal Financial Services
JSW Steel
Update on Bhushan Power and Steel (BPSL) acquisition:
The erstwhile promoters of Bhushan Power and Steel (BPSL) and certain
operational creditors have filed an Appeal before the Supreme Court against the
NCLAT order declaring JSTL the winner of the bid process to acquire BPSL.
Management has informed that the BPSL transaction would not be consolidated
with standalone operations and would be accounted under ‘Equity Method’.
Quarterly performance (standalone)
Y/E March
(Standalone)
Net Sales
EBITDA
Margin (%)
Spreads
Conv. cost
EBITDA (INR/T)
EBITDA (USD/T)
Interest
Depreciation
Other Income
PBT (before EO Item)
EO Items
PBT (after EO Item)
Total Tax
% Tax
Reported PAT
Pref. Dividend
Adjusted PAT
Change (YoY %)
1Q
1,76,980
38,320
21.7
22,715
12,496
10,219
147
10,050
8,260
1,590
21,600
21,600
7,210
33.4
14,390
14,390
-35.2
(INR m)
FY20
FY21
FY20
FY21E
vs Est
2Q
3Q
4Q
1Q
2QE
3QE
4QE
1QE (%)
1,50,540 1,55,170 1,52,770 1,02,930 1,31,315 1,63,746 1,69,428 6,35,460 5,67,419 95,652
8
23,300 24,170 32,200 14,290 26,789 32,960 38,203 1,17,990 1,12,242 14,418
-1
15.5
15.6
21.1
13.9
20.4
20.1
22.5
18.6
19.8
15.1
18,619 17,015 21,627 17,201 19,906 19,823 21,184 19,947 19,729 18,319
-6
12,147 11,017 12,924 12,079 11,870 11,793 12,030 12,123 11,935 12,774
-5
6,472
5,998
8,703
5,122
8,036
8,030
9,154
7,824
7,794 5,545
-8
92
84
120
68
107
107
122
110
104
74
-8
10,750
9,880
9,540
9,330
9,423
9,518
9,803 40,220 38,074 9,635
-3
8,740
8,930
9,290
8,670
8,757
8,757
9,757 35,220 35,940 9,290
-7
1,880
1,350
1,460
1,540
1,500
1,600
1,560
6,280
6,200 1,400
10
5,690
6,710 14,830
-2,170 10,109 16,286 20,203 48,830 44,428 -3,107
-30
26,160
2,500 -13,090
15,570
31,850
9,210
1,740
-2,170 10,109 16,286 20,203 64,400 44,428 -3,107
-30
2,680
2,300
1,260
-710
3,134
5,049
6,263 13,450 13,735
-963
8.4
25.0
72.4
32.7
31.0
31.0
31.0
20.9
30.9
31.0
29,170
6,910
480
-1,460
6,975 11,237 13,940 50,950 30,693 -2,144
-32
4,440
-80.3
5,177
-72.6
13,570
-22.2
-1,460
-110.1
6,975
57.1
11,237
117.0
13,940
2.7
37,578
-53.7
30,693 -2,144
-32
-18.3 -114.9
Source: Company, MOFSL
Exhibit 1: Operational performance – Standalone
Production ('000 tons)
Change (YoY %)
Change (QoQ %)
Sales ('000 tons)
Change (YoY %)
Change (QoQ %)
Realization (INR/ton)
Change (YoY %)
Change (QoQ %)
EBITDA(INR/Ton)
Change (YoY %)
Change (QoQ %)
1Q
4,240
3.2
1.7
3,750
-2.1
-12.6
47,195
-5.3
2.8
10,219
-19.0
1.0
FY20
2Q
3Q
3,840
4,020
-8.1
-5.0
-9.4
4.7
3,600
4,030
-9.1
9.5
-4.0
11.9
41,817 38,504
-16.0
-23.0
-11.4
-7.9
6,472
5,998
-46.5
-50.3
-36.7
-7.3
4Q
3,970
-4.8
-1.2
3,700
-13.8
-8.2
41,289
-10.1
7.2
8,703
-14.0
45.1
1Q
2,960
-30.2
-25.4
2,790
-25.6
-24.6
36,892
-21.8
-10.6
5,122
-49.9
-41.1
FY21E
2QE
3QE
3,546
4,367
-7.6
8.6
19.8
23.1
3,334
4,105
-7.4
1.9
19.5
23.1
39,392
39,892
-5.8
3.6
6.8
1.3
8,036
8,030
24.2
33.9
56.9
-0.1
4QE
4,440 16,070
11.8
28.0
1.7
-3.7
4,173 15,080
12.8
24.8
1.7
-4.3
40,599 42,139
-1.7
38.7
1.8
-13.6
9,154 7,824
5.2
65.2
14.0
-33.0
FY20
FY21
15,313
-3.1
-4.7
14,401
-2.6
-4.5
39,400
11.4
-6.5
7,794
-0.9
-0.4
1QE
2,960
-34.8
-30.3
2,600
-30.7
-29.7
36,789
-22.0
-10.9
5,545
-45.7
-36.3
vs Est
(%)
7
0
-8
Source: MOFSL, Company
25 July 2020
4
 Motilal Oswal Financial Services
JSW Steel
Exhibit 2: JSW Steel EBITDA and spreads
Spreads (INR/t)
25,000
20,000
15,000
10,000
5,000
0
EBITDA (INR/t)
Source: MOFSL, Company
Exhibit 3: Quarterly performance (subsidiaries)
Y/E March
Net Sales
EBITDA
JSW coated
US Mills
Acero
Aferpi
others
PAT
1Q
21,140
-1,160
1,720
139
-2,512
-328
-179
-4,110
FY20
2Q
3Q
20,520 22,880
-650
-2,160
1,530
1,340
-788
-897
-2,224
-1,794
-540
-784
1,372
-25
-3,631
-4,943
4Q
26,100
-2,450
910
-718
-1,463
-870
-309
-3,210
1Q
14,890
-880
280
-855
-941
-578
1,213
-4,150
FY21E
2QE
3QE
27,193 28,626
-1,357
76
774
1,235
-788
-630
-1,183
-741
-761
-388
600
600
-3,181
-2,117
4QE
30,047
1,497
1,556
-263
-267
-129
600
-1,079
FY20
90,640
-6,420
5,500
-2,264
-7,992
-2,522
858
-15,894
FY21E
INR m
vs Est
1QE
(%)
1,00,756 27,097
-45
-664
-1,453
-39
3,845
405
-31
-2,535
-788
9
-3,132
-757
24
-1,855
-528
9
3,013
215
465
-10,528
-3,148
32
Source: MOFSL, Company
Exhibit 4: Target price calculations -
Y/E March
A. S/A volumes
B. EBITDA per ton
C. S/A EBITDA (AxB)
D. Sub. EBITDA
E. Cons. EBITDA (C+D)
F. Target EV/EBITDA (x)
G. Target EV (FxG)
less: Net Debt (Rs m)
Add: Non-current investments (at Book value)
Equity value
No. of shares
Equity value /sh.
2020
15.1
7,824
1,17,990
-6,420
1,11,570
2021E
14.4
7,794
1,12,242
-664
1,11,578
INR m
2022E
18.0
9,359
1,68,459
9,476
1,77,935
7.0
12,47,326
6,77,120
9,740
5,79,947
2,400
242
Source: MOFSL
6,39,300
6,64,059
25 July 2020
5
 Motilal Oswal Financial Services
JSW Steel
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
Tax
Rate (%)
Reported PAT
Minority interests
Share of Associates
Preference dividend
Adj. PAT (after MI & Asso)
Change (%)
2016
4,18,789
-20.9
3,58,059
60,730
14.5
31,879
28,851
33,027
1,682
-2,494
-21,254
-23,748
-15,241
64.2
-8,508
950
138
279
-84
-100.5
2017
5,56,046
32.8
4,33,448
1,22,598
22.0
35,154
87,444
37,681
1,521
51,284
51,284
16,743
32.6
34,541
64
1,193
35,798
-42,485
2018
7,00,870
26.0
5,54,010
1,46,860
21.0
33,870
1,12,990
37,010
1,670
77,650
5,730
83,380
22,670
27.2
60,710
990
420
57,948
61.9
2019
8,47,570
20.9
6,58,050
1,89,520
22.4
40,410
1,49,110
39,170
2,040
1,11,980
1,11,980
36,440
32.5
75,540
1,150
-300
76,390
31.8
2020
7,26,100
-14.3
6,14,530
1,11,570
15.4
42,460
69,110
42,650
5,460
31,920
20,610
52,530
12,440
23.7
40,090
1,110
-900
21,683
-71.6
2021E
6,68,174
-8.0
5,56,597
1,11,578
16.7
43,140
68,438
41,394
5,360
32,404
32,404
11,762
36.3
20,642
1,083
-1,560
20,165
-7.0
(INR m)
2022E
8,84,142
32.3
7,06,207
1,77,935
20.1
50,227
1,27,708
53,994
5,414
79,129
79,129
24,818
31.4
54,310
1,083
-1,560
53,833
167.0
Balance sheet
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
Investments
Curr. Assets
Inventory
Account Receivables
Cash and Bank Balance
Others
Curr. Liability & Prov.
Account Payables
Provisions & Others
Net Current Assets
Appl. of Funds
E: MOFSL Estimates
2016
2,417
1,85,032
1,87,449
68
5,13,038
39,123
7,39,678
7,89,575
2,26,239
5,63,336
69,040
6,184
2,07,727
84,034
28,016
7,340
88,337
1,06,610
37,125
69,485
1,01,117
7,39,678
2017
2,400
2,24,070
2,26,470
-2,460
5,40,200
29,900
7,94,110
6,63,830
76,530
5,87,300
43,630
10,660
2,38,460
1,13,950
41,490
17,850
65,170
85,940
38,460
47,480
1,52,520
7,94,110
2018
2,410
2,77,570
2,79,980
-4,640
4,96,470
25,560
7,97,370
6,88,170
1,09,690
5,78,480
59,500
11,570
2,70,150
1,25,940
47,040
13,750
83,420
1,22,330
69,110
53,220
1,47,820
7,97,370
2019
2,400
3,45,550
3,47,950
-4,500
5,89,560
37,770
9,70,780
7,75,920
1,49,480
6,26,440
1,18,890
18,120
3,84,520
1,45,480
71,600
62,690
1,04,750
1,77,190
59,310
1,17,880
2,07,330
9,70,780
2020
2,400
3,63,590
3,65,990
-5,750
7,20,580
16,770
10,97,590
8,11,880
1,91,940
6,19,940
2,71,910
12,570
4,13,780
1,38,640
45,050
1,20,050
1,10,040
2,20,610
76,900
1,43,710
1,93,170
10,97,590
2021E
2,400
3,79,433
3,81,833
-5,750
7,59,350
22,051
11,57,484
8,90,940
2,34,140
6,56,800
2,81,910
12,570
3,81,899
1,34,464
42,104
95,291
1,10,040
1,75,695
75,055
1,00,640
2,06,204
11,57,484
(INR m)
2022E
2,400
4,28,944
4,31,343
-5,750
7,59,350
31,044
12,15,987
11,40,940
2,84,367
8,56,573
1,21,910
12,570
4,24,889
1,76,906
55,713
82,230
1,10,040
1,99,955
99,315
1,00,640
2,24,934
12,15,987
25 July 2020
6
 Motilal Oswal Financial Services
JSW Steel
Financials and valuations
Ratios
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 (%)
EV/ton
Return Ratios (%)
EBITDA Margins (%)
Net Profit Margins (%)
RoE
RoCE (pre-tax)
RoIC (pre-tax)
Working Capital Ratios
Fixed Asset Turnover (x)
Asset Turnover (x)
Debtor (Days)
Inventory (Days)
Creditors(Days)
Working Capital (Days)
Leverage Ratio (x)
Current Ratio
Interest Cover Ratio
Debt/Equity
2016
2017
14.9
29.0
94.4
0.8
6.1
2018
24.0
39.2
116.2
2.3
11.3
8.5
5.2
1.8
1.4
6.7
1.1
970
14.5
(0.0)
2.7
3.0
0.5
0.6
24
73
32
65
1.9
0.9
2.7
22.0
6.4
17.4
7.9
8.5
0.8
0.7
27
75
25
77
2.8
2.3
2.3
21.0
8.3
22.8
9.6
10.6
1.0
0.9
24
66
36
54
2.2
3.1
1.7
2019
31.8
48.3
145.0
3.3
12.2
6.4
4.2
1.4
1.3
5.6
1.6
969
22.4
9.0
24.4
11.3
13.5
1.1
0.9
31
63
26
68
2.2
3.8
1.5
2020
9.0
34.4
152.5
4.1
55.1
22.7
6.0
1.3
1.6
10.1
2.0
1,058
15.4
3.0
6.1
4.5
6.0
0.9
0.6
23
70
41
52
2.3
1.6
1.7
2021E
8.4
26.6
159.1
2.0
23.8
24.4
7.7
1.3
1.7
10.4
1.0
1,070
16.7
3.0
5.4
4.2
6.1
0.7
0.6
23
70
41
52
2.2
1.7
1.7
2022E
22.4
43.6
179.7
2.0
8.9
9.1
4.7
1.1
1.3
6.6
1.0
866
20.1
6.1
13.2
7.4
9.7
0.8
0.7
23
70
41
52
2.1
2.4
1.6
9.7
77.5
1.1
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 Invest.
Acquisition in subs.
Int. & Dividend Income
Others
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
Regrouping etc
Closing Balance
E: MOFSL Estimates
2016
60,730
2,172
6,189
-2,055
67,035
-51,787
-1
631
39
-51,118
3,781
-3,536
-27,997
-27,752
-11,835
19,136
39
7,340
2017
1,22,598
-2,658
-38,690
-2,370
78,880
-44,350
-2,940
-1,470
1,180
450
-47,130
20
10,750
-2,180
-35,690
-27,100
4,650
7,340
5,860
17,850
2018
1,46,860
2,340
-11,010
-14,400
1,23,790
-47,360
90
-3,610
1,260
600
-49,020
-270
-39,920
-6,550
-35,110
-81,850
-7,080
17,850
2,980
13,750
2019
1,89,520
-1,080
-15,810
-26,300
1,46,330
-1,02,060
2,510
-14,270
1,580
-2240
-1,14,480
-1,530
66,540
-9,330
-38,150
17,530
49,380
13,750
-440
62,690
2020E
1,11,570
11,440
16,390
-11,550
1,27,850
-1,28,100
850
1,000
5,130
-74740
-1,95,860
60
1,10,750
-11,950
-46,970
51,890
-16,120
62,690
73,480
1,20,050
2021E
1,11,578
977
-6,481
1,06,074
-90,000
(INR m)
2022E
1,77,935
-31,791
-15,826
1,30,319
-90,000
5,360
-84,640
5,414
-84,586
-4,799
-41,394
-46,193
-24,759
1,20,050
95,291
-4,799
-53,994
-58,793
-13,061
95,291
82,230
25 July 2020
7
 Motilal Oswal Financial Services
JSW Steel
NOTES
25 July 2020
8
 Motilal Oswal Financial Services
JSW Steel
Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>=15%
SELL
< - 10%
NEUTRAL
< - 10 % to 15%
UNDER REVIEW
Rating may undergo a change
NOT RATED
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within
following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the
Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial
products. MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are
available on www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a
registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and
National Commodity & Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National
Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance
Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance products.
Details of associate entities of Motilal Oswal Financial Services Limited are
available on the website at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and
buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have
any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report
should be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific
merchant banking, investment banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the
website at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental
research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated
from MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability
or use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong
Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst
Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of
research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity
to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these
securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not
located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under
applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers
Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any
brokerage and investment services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is
intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as
"major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which
this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration
provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange
Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-
dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this
chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.
registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public
appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets
services license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and
Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL
in respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”,
of which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the
SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and
inform MOCMSPL.
Specific Disclosures
1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOFSL has not received any compensation or other benefits from third party in connection with the research report
10 MOFSL has not engaged in market making activity for the subject company
25 July 2020
9
 Motilal Oswal Financial Services
JSW Steel
*******************************************************************************************************************************
The associates of MOFSL may have:
-
financial interest in the subject company
-
actual/beneficial ownership of 1% or more securities in the subject company
-
received compensation/other benefits from the subject company in the past 12 months
-
other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on
the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL
even though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
-
acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
-
be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the
company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies)
-
received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not
consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from
clients which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the
research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and
may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent
of MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in
nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty,
representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The
report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as
customers by virtue of their receiving this report.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or
distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for
informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing
in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances.
The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment
objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this
document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this
document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views
expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade
securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of
the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and
should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make
modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from
time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to
perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a
separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of
information that is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or
may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on,
directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or
entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law,
regulation or which would subject MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in
all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.
Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost
revenue or lost profits that may arise from or in connection with the use of the information.
The person accessing this information specifically agrees to exempt MOFSL or any of its
affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such
misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages,
expenses that may be suffered by the person
accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263;
Website
www.motilaloswal.com.CIN
no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road,
Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:
INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company
Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth
Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is
a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt.
Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL.
Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no
assurance or guarantee of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance
Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National
Company Law Tribunal, Mumbai Bench.
25 July 2020
10