Analyst Research Report Snapshot

Title:

Jindal Steel & Power Ltd.|Q1FY15 First Cut Analysis | EBITDA margin expanded by 438 bps YoY | Maintain BUY rating on the stock with target price of Rs.365

Price:

$23.00

Provider:

IndiaNivesh Securities Pvt Ltd

Date:

07 Aug 2014

Pages:

3

Type:

AcrobatPDF

Companies referenced:

JNSP.NS

Available for Immediate Download
Summary:

Jindal Steel & Power Ltd.|Q1FY15 First Cut Analysis EBITDA margin expanded by 438 bps YoY | Maintain BUY rating on the stock with target price of Rs.365 |Jindal Steel & Power’s (JSPL) consolidated Q1FY15 PAT increased 4% QoQ to Rs. 4.18 bn (v/s consensus of Rs. 3.67 bn) due to higher volume in steel business and higher PLF coupled with better realization in power business. However, major increase in depreciation and financing costs and restructuring costs of WCL, Australia caused net profit at consolidated level to drop by 20.5% on YoY basis. EBITDA margin expanded by 438 bps YoY and 751 bps QoQ to 33.4% due to lower raw material cost and higher realization in both steel and power business. Valuation: JSPL’s stock has underperformed over the last few quarters on account of issues related to the allocation of coal blocks and delay in project commissioning. Subdued steel demand in the domestic market also weigh on sentiment. We believe the huge investments done in the past by the company would start yielding higher returns from FY15. At CMP of Rs. 275 JSPL trades at 5.6xFY16E EV/EBITDA, which is lower than its historical average of 10.5x. We maintain BUY rating on the stock with target price of Rs.365 (8xFY16E EV/EBITDA).

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