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Jindal Steel & Power (Q1 FY12)

India Infoline News Service | Mumbai |

Maintain Market Performer rating with a revised 9-month price target of Rs660

CMP Rs614, Target Rs660, Upside 7.6%

  • Q1 FY12 standalone revenue of Rs25.3bn was lower than our estimate on account of lower steel sales volume
  • Except sponge iron, production of all other products declined on a qoq basis
  • Operating profit decreased 9.9% qoq to Rs9.6bn, marginally lower than our estimate of Rs9.9bn on account of lower steel sales
  • Average power realizations under JPL declined on a qoq basis from Rs4.1/unit in Q4 FY11 to Rs3.8/unit
  • JPL’s PAT decreased by 8.6% qoq and 19.5% qoq to Rs4.5bn, on the back of lower power tariffs
  • Maintain Market Performer rating with a revised 9-month price target of Rs660 
Result table
(Rs mn) Q1 FY12  Q4 FY11 % qoq Q1 FY11 % yoy
Net sales 25,265 27,422 (7.9) 21,216 19.1
Material costs (6,682) (7,452) (10.3) (6,146) 8.7
Power and fuel costs (1,888) (1,997) (5.5) (1,151) 64.0
Personnel costs (881) (693) 27.1 (617) 42.7
Other overheads (6,181) (6,589) (6.2) (5,389) 14.7
Operating profit 9,634 10,691 (9.9) 7,913 21.7
OPM (%) 38.1 39.0 (86) bps 37.3 83 bps
Depreciation (2,066) (1,945) 6.2 (1,475) 40.1
Interest (1,325) (1,061) 24.9 (742) 78.6
Other income 167 1,232 (86.5) 62 168.5
PBT 6,410 8,918 (28.1) 5,759 11.3
Tax (1,709) (2,435) (29.8) (1,402) 21.9
Effective tax rate (%) 26.7 27.3
24.3
Adjusted PAT 4,702 6,483 (27.5) 4,357 7.9
Adj. PAT margin (%) 18.6 23.6 (503) bps 20.5 (193) bps
Reported PAT 4,702 6,483 (27.5) 4,357 7.9
Ann. EPS (Rs) 20.1 27.8 (27.5) 18.7 7.8
Source: Company, India Infoline Research

Lower steel volumes lead to a 7.9% qoq decline in topline
JSPL’s standalone Q1 FY12 revenue declined 7.9% qoq to Rs25.3bn lower than our estimate of Rs27.3bn. The underperformance was due to lower steel sales volume. Pellet sales jumped 73.6% on a qoq basis to 0.35mn tons from 0.2mn tons in Q4 FY11. Metallic sales volume was quite lower on a yoy basis and also on a qoq basis on account of higher internal consumption. In Q1 FY12, steel production decreased 2.4% qoq to 607,726 tons and sales volumes decreased 14% qoq to 456,887 tons. Segment wise, revenues from the steel division decreased 9.6% qoq and that from the power division increased by 4.8% qoq. The jump in revenue from power division was due to higher power realizations. Power production volumes decreased 6.9% qoq to 931mn units. Average power realization in the standalone entity increased from Rs3.44/unit in Q4 FY11 to Rs3.87/unit during the quarter.
Production and sales volume
  Q1 FY12  Q4 FY11 % qoq Q1 FY11 % yoy
Production




Sponge iron 363,653 322,335 12.8 345,305 5.3
Pig iron 402,107 426,359 (5.7) 387,828 3.7
Steel products 607,726 622,594 (2.4) 506,001 20.1
Pellets 828,800 866,725 (4.4) 207,748 298.9
Power 931 1,000 (6.9) 729 27.7
Sales




Sponge iron - 8,258 - 97,164 -
Pig iron * - 40,694 - 105,020 -
Steel products 456,887 531,104 (14.0) 503,176 (9.2)
Pellets 347,104 200,000 73.6 11,893 2,818.6
Power 259 299 (13.4) 240 7.9
Total steel volumes 456,887 580,056 (21.2) 705,360 (35.2)
Source: Company, India Infoline Research * pig iron sales not provided for the quarter

Segmental results (Standalone)
  Q1 FY12  Q4 FY11 qoq chng Q1 FY12  Q4 FY11
Sales (Rs m)

in % Sales Contribution (%)
Iron & Steel 24,098 26,658 (9.6) 95.4 97.2
Power 3,606 3,442 4.8 14.3 12.6
Others 296 217 36.2 1.2 0.8
Less: Intersegment sales (2,735) (2,896) (5.6) (10.8) (10.6)
Total 25,265 27,422 (7.9)

EBIT (Rs m)

in % EBIT contribution (%)
Iron & Steel 7,671 8,289 (7.5) 119.7 93.0
Power 1,313 1,597
BSE 159.05 1.70 (1.08%)
NSE 159.20 1.75 (1.11%)

***Note: This is a BSE Chart


Read more on: Jindal  Steel  &  Power 
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113111403238
Jindal Steel & Power (Q1 FY12)
Jindal Steel & Power (Q1 FY12)
Maintain Market Performer rating with a revised 9-month price target of Rs660
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