Jindal Steel Ltd. share price target

For running the DRI plant at full capacity, production at 5-6 units of CGP will have to be ramped up. In contrast, if coal were made available from its erstwhile captive mine (de- allocated in 2014), the receiving time (post production) would be ~12 hours and cost of gas production would have been USD3-4/mmbtu. DRI plant has restarted in Mar19 and is operating at a run-rate of ~1mtpa (3,000tpd at 50% utilization). JSP plans to increase the DRI utilization run-rate to ~80-85% by Sep19. JSP has started using surplus coke oven gases (two coke oven batteries commissioned last year) in DRI production. The third coke oven battery is likely to be commissioned in FY20. Usage of coke oven gases in DRI production is likely to increase. Coke oven acts as a cost-effective substitute to syngas (gas obtained from CGP).

2 February 2019 JSPs 3QFY19 consolidated EBITDA declined 6% QoQ (+29% YoY) to INR20.1b led by a 6% decline in steel volumes in India and margin compression in Oman Steel & Jindal Power (JPL). But, the same was partly offset by improved margins in India. Interest cost declined 4% QoQ to INR10.4b, while Adj. PAT turned marginally negative at INR258m. Steel sales declined 6% QoQ (+26% YoY) to 1.2mt as prices were volatile in Dec19; due to the mix, average steel prices were higher. EBITDA per ton increased 9% QoQ to INR12,344 on higher spreads, despite steel prices weakening. EBITDA increased 2% QoQ (+61% YoY) to INR14.8b. Steel sales declined 4% QoQ to 450ktm, while production recovered to 460kt (+21% QoQ, +10% YoY), after maintenance shutdown. EBITDA per ton slid again by 27% to USD71/t on volatility in steel prices. EBITDA declined 32% QoQ to INR2.2b.

Outlook & Valuation: We have positive view on steel and power sectors on long term basis and expect JSPL to perform well in coming years owing to ramp up of Angul plant and realization in steel segment. We also expect power segment to perform well on account of improving power demand situation and various effort by GoI for availabilit..

13 November 2018 2QFY19 consolidated EBITDA declined 3% QoQ (+61% YoY) to INR22b (15% beat), led by compression in steel margins, both in India and Oman. The impact, however, was offset by improved profitability at overseas mines (e.g. Mozambique) and reversal of INR1b provision at Australia. Interest cost increased 12% QoQ to INR10.8b. Adj. PAT declined 51% QoQ to INR882m (v/s our estimate of a loss of INR2.3b). Steel sales increased 8% QoQ (+54% YoY) to 1.28mt. EBITDA per ton declined 18% QoQ to INR11,344 due to lower spreads. Steel sales increased 7% YoY to 470ktm, while production was lower at 380kt due to maintenance shutdown. EBITDA per ton was down 33% to USD98/t. EBITDA declined 29% QoQ to INR3.

Outlook & Valuation: We maintain our Buy recommendation with a slight reduction in Target Price to `320 from `327 (due to increased net debt level). However, we expect JSPL to perform well in coming years owing to improving realization in steel segment, limited addition of steel capacity in near term and improving demand of steel goin..

Revenue increased by 23.45% to Rs. 8522.79 Cr in Q4FY18 when compared to the previous quarter. Jindal Steel & Power Ltd Q4FY18 results Comment

4QFY18 consol. EBITDA grew 38% YoY (+33% QoQ) to INR21.4b (est. of INR19.5b), led by strong growth in steel volumes and higher steel margins. Adj. PAT turned positive to INR1.3b (est. of a loss of INR1.2b). Interest cost rose 24% YoY to INR10.7b, despite net debt declining by INR35b to INR420b. FY18 consol. EBITDA increased 39% YoY to INR65b and adj. loss after tax reduced from INR19b to INR8b. Cash profit more than doubled to INR26b. Standalone:Steel sales increased 26% QoQ (28% YoY) to 1.18mt. EBITDA per ton rose 31% QoQ to INR12,871, largely driven by higher spreads and some benefit of operating leverage. EBITDA increased 66% YoY to INR15.2b.

Further to our Research report dated October 18th 2017, wherein we had recommended a BUY at the then price of Rs. 161.20, the share price had reached its 52 week high to Rs. 294.30 increased by ~83% after the third quarter results for the FY18. The company has been steadily moving towards new highs with strong financial outlook. Healthy demand is expected for steel domestically...

The newly-commissioned blast oxygen furnace (BOF) is ramping up well. Hot metal from the blast furnace (BF) is transferred to the BOF through torpedoes. The BOF is operating at 45 minutes per batch, which will be gradually optimized to 35-40 minutes per batch. It has already touched a peak of 27 heats per day (against capacity of 36-41 at optimized rate). Crude steel production was 165kt in January, and is likely to increase to 280kt in February, with a target of 400ktpm by May 2018. By this time, the second 2.5mtpa billet caster will have commissioned. This will take told casting capacity from 3.7mtpa to 6.2mtpa and pave the way for full ramp-up of steel-making capacity. Bottlenecks will shift to rolling capacity at Angul. However, excess semis will be rolled in Patratu site in Jharkhand.

Jindal Steel & Power Ltd Q2FY18 results comment Revenue grew by 7.63% to Rs. 6035.15 Cr in Q2FY18 when compared to the previous quarter. Also, it increased by 34.55% when compared with Q2FY17.