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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
  • JPLs 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% qoqQ1 FY11% yoy
Net sales25,26527,422(7.9)21,21619.1
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 profit9,63410,691(9.9)7,91321.7
OPM (%)38.139.0(86) bps37.383 bps
Depreciation(2,066)(1,945)6.2(1,475)40.1
Interest(1,325)(1,061)24.9(742)78.6
Other income1671,232(86.5)62168.5
PBT6,4108,918(28.1)5,75911.3
Tax(1,709)(2,435)(29.8)(1,402)21.9
Effective tax rate (%)26.727.3
24.3
Adjusted PAT4,7026,483(27.5)4,3577.9
Adj. PAT margin (%)18.623.6(503) bps20.5(193) bps
Reported PAT4,7026,483(27.5)4,3577.9
Ann. EPS (Rs)20.127.8(27.5)18.77.8
Source: Company, India Infoline Research

Lower steel volumes lead to a 7.9% qoq decline in topline
JSPLs 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% qoqQ1 FY11% yoy
Production




Sponge iron363,653 322,335 12.8 345,305 5.3
Pig iron402,107 426,359 (5.7)387,828 3.7
Steel products607,726 622,594 (2.4)506,001 20.1
Pellets828,800 866,725 (4.4)207,748 298.9
Power931 1,000 (6.9)729 27.7
Sales




Sponge iron-8,258 -97,164 -
Pig iron *-40,694 -105,020 -
Steel products456,887 531,104 (14.0)503,176 (9.2)
Pellets347,104 200,000 73.6 11,893 2,818.6
Power259 299 (13.4)240 7.9
Total steel volumes456,887 580,056 (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 FY11qoq chngQ1 FY12 Q4 FY11
Sales (Rs m)

in %Sales Contribution (%)
Iron & Steel24,098 26,658 (9.6)95.4 97.2
Power3,606 3,442 4.8 14.3 12.6
Others296 217 36.2 1.2 0.8
Less: Intersegment sales(2,735)(2,896)(5.6)(10.8)(10.6)
Total25,265 27,422 (7.9)

EBIT (Rs m)

in %EBIT contribution (%)
Iron & Steel7,671 8,289 (7.5)119.7 93.0
Power1,313 1,597
BSE 142.70 [4]([2.73]%)
NSE 144 [2.85]([1.94]%)

***Note: This is a BSE Chart









 

 
 
 
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