29 January 2014
3QFY14 Results Update | Sector:
Metals
Jindal Steel & Power
BSE SENSEX
20,647
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
S&P CNX
6,120
JSP IN
934.8
442/182
-1/19/-14
CMP: INR254
TP: INR270
Neutral
S/A & Oman’s operating performance improved; power rates dragged JPL;
GNM consolidation dragged PAT
M.Cap. (INR b) / (USD b) 237.5/3.8
Financials & Valuation (INR Billion)
Y/E MAR
Net Sales
EBITDA
Adj PAT
Gr (%)
RoE (%)
RoCE (%)
P/E (x)
P/BV (x)
EV/EBITDA
( )
2014E 2015E 2016E
203.7 259.7 314.2
63.8
23.3
-33.2
11.1
9.2
10.2
1.1
8.7
78.3
25.8
27.6
10.9
11.5
9.8
9.2
1.0
7.5
96.7
32.5
34.7
25.9
12.7
11.7
7.3
0.9
5.7
Adj.EPS(INR) 24.9
JSP’s consolidated adjusted PAT increased 2% QoQ to INR5.6b. Although
consolidated EBITDA at INR17b (+9% QoQ) was 11% ahead of estimates, the
adjusted PAT was below estimates due to (1) higher interest cost, (2)
consolidation of Gujarat NRE’s Australian coking coal assets (GNM) and (3) higher
tax rate. The performance of Oman HBI unit was impressive, while Jindal Power’s
profitability was hurt by lower power rates.
Standalone revenue increased 3% QoQ helped by 3% increase in sales volumes
and 4% increase in steel realization. Pellet sales were reduced due to higher
internal consumption in steel making. Margins improved as power generation
increased 34% QoQ to 1.6b kwh.
Jindal Power’s PAT declined 11% QoQ to INR2.7b as average power realization
declined 10% QoQ to INR3.1/kwh.
Financial losses in overseas subsidiaries reduced significantly from ~INR1b in
2QFY14 to INR19m in 3QFY14 due to better performance of Oman and South
African coal mines.
New pellet plant at Barbil, Angul and Oman steel plant and Tamnar-II will drive
growth of operating cash flows as they all will be commissioned by end-FY14.
However, higher interest cost and depreciation will drag earning’s growth.
As a combined impact of GNM losses and higher interest costs, EPS is cut 9/7% for
FY14E/FY15E respectively. Net debt has increased 5% QoQ to INR315b due to
acceleration of capex. We value the stock at INR270 based on SOTP. Maintain
Neutral.
Sanjay Jain
(SanjayJain@MotilalOswal.com); +91 22 3982 5412
Pavas Pethia
(Pavas.Pethia@MotilalOswal.com); +91 22 3982 5413
Investors are advised to refer through disclosures made at the end of the Research Report.