Jindal Steel Ltd. share price target

Jindal Steel and Power Limited is an India-based steel producer.

We visited Jindal Steel and Power’s (JSPL) Angul plant. The plant has evolved and improved a lot since our first visit in CY09. Availability of linkage coal allows steady quality of Syngas generation, and allows smooth operation of the DRI – current cost of Syn gas generation is US$5-6/mmbtu.

Domestic steel stocks have been under pressure due to 2x increase in coking Change in Estimates | Target | Reco coal prices, negative sentiments on Chinese demand and 50% fall in iron ore prices. Strong steel prices and lower costs benefitted the Ferrous sector over...

Near-term demand is tepid and demand decline is seen (especially last month) due to (a) the ban on construction in the NCR region due to severe pollution levels, (b) an extended monsoon, (c) weak sentiment in the international market consumers are adopting the wait-and-watch policy, and (d) sufficient inventory lying with traders, who, in a falling market, would try and liquidate rather than accumulate....

Coking coal cost would increase by US$50/t QoQ in Q3FY22 Jindal steel & Power (JSP) reported Q2FY22 EBITDA in line with our estimates; above consensus estimates by 4%. EBITDA margins came in line...

Jindal Steel & Power (JSPL) Q2FY22 EBITDA was in line with our forecast. Its EBITDA was flat QoQ (despite domestic sales volumes increasing by 32% QoQ to 2.1 mn tonnes) on fall in pellet realizations and sharp increase in prices of coking coal. The company's volumes jumped QoQ despite sluggish demand in the domestic market as it stepped up exports. Importantly, JSPL's net debt fell by Rs41 bn QoQ to Rs112 bn and it aims to become net debt free company by FY23. Lastly, Jindal Power divestment is approved by...

Zero cost iron ore inventory fully exhausted in the quarter Jindal steel & Power (JSP) reported Q1FY22 EBITDA above our/consensus estimates by 7%. The beat was primarily on count of higher realisations....

Jindal Steel & Power (JSPL) reported lower than expected Q1FY22 EBIDTA on weaker than expected sales volumes. Its standalone EBITDA decreased 7% QoQ to Rs45 bn as its volumes fell 16% to 1.6 mn tonnes. Exports contributed 34% to its sales in 1QFY22 compared to 27% in Q1FY21 as lockdown affected domestic demand. Nevertheless, its...

Jindal Steel & Power (JSPL) Q4FY21 profitability was a beat. It reported highest ever consolidated EBITDA of Rs53 bn (+153% YoY) mainly driven by higher realizations and operating efficiencies. Its net debt fell by Rs35 bn QoQ to Rs138 bn. Importantly, JSPL announced its intention to double its steel capacity at Angul from 6 mtpa to 12 mtpa...

It has announced an INR180b capex at Angul to expand its Steel capacity by 85% to 15.9mtpa by FY25, at a very competitive cost of ~USD390/t. With the proposed sale of Jindal Power (JPL), JSP would become a pure play Indian Steel company, which should also aid in better value discovery as the Steel business is still under-valued at 4.1x FY23E EV/EBITDA. We raise our FY22E/FY23E EBITDA by 15%/11% to factor in strong Steel prices. Despite the announced capex, we expect net debt to fall further to INR126b (excluding the ~INR50b net debt reduction from the Power...