Jindal Steel Ltd. share price target

Jindal Steel and Power’s (JSPL) Q3FY23 performance surpassed street estimates by 5%, mainly on slightly lower cost. Key points: 1) EBITDA/te (adj. for forex gains) was Rs11,381 (up 60.5% QoQ) on positive price-cost spread; 2) sales volume was impacted by rake/wheel shortages and lower export opportunities.

Jindal Steel and Power (JSPL) has been the top performer among mainstream ferrous players with a robust return of 45% in the past 3 months.

Jindal Steel and Power’s (JSPL) Q2FY23 performance missed consensus estimates mainly on negative price-cost spread.

Q1 results ahead of consensus but net debt reduction muted with higher working capital build

Jindal Steel & Power (JSPL) reported lower-than-expected EBIDTA and PAT in Q4FY22. EBIDTA/te declined by ~Rs3,815/te QoQ to Rs13,589/te; net debt at the end of Q4FY22 was Rs88.8bn. Consolidated EBITDA also declined by Rs3427/te – this could have been better but for US$14mn forex loss in Mozambique and inability to ramp up sales from the Russel vale coal mines.

Standalone EBITDA grew 37% YoY, but down 10% QoQ, to INR17,404/t, 12% below our estimate at INR19,673/t. EBITDA reduction of INR3,863/t was largely on account of a sharp rise in net RM/conversion costs (up INR4,255/INR3,035 per tonne QoQ). EBITDA stood at INR31.6b (down 19% YoY and 30% QoQ) in 3QFY22, 7%...

Rs17,405 (PLe:Rs18,480), down 18% QoQ (17% YoY). JSP reduced net debt by 83%/Rs374bn (including cash of Rs30.4bn to be received on closure of JPL deal) since FY17 through free cash flow generation and divestment of Oman steel operations and JPL. 45% of the total reduction was contributed by divestments (40%) and issuance of equity (5%) while rest through operating cash flows. Resultantly, current Net debt/EBITDA is expected at comfortable level of 0.7x on normalised earnings assumed for FY23e with EBITDA/t at Rs12,000 and accelerated capex on 6mnt...