Jindal Steel and Power

Captital Market | Mumbai |

Tough Quarter

JSPL, notwithstanding several unfavourable developments during Q2FY'15 including de-allocation of its coal mines, reduced demand for steel due to monsoon season and major difficulties encountered in importing raw material due to heavy congestion in ports and non - availability of rail transport out of ports. JSPL grew its consolidated Q2FY'15 turnover by 6% y-o-y. EBITDA in Q2FY'15 at consolidated level also increased by 13% compared to Q2 of the previous year. EBITDA in percentage terms increased from 30% in Q2FY'14 to 32% in Q2FY'15. However, due to 53% increase in burden of interest and depreciation, the PAT for Q2FY'15 was lower by 12%. The company's cash profit during Q2 increased from Rs. 907 crore in FY'14 to Rs. 1308 crore in FY'15 - a net increase of 44%. JSPL's consolidated turnover and EBITDA during H1 also increased by 6% and 18% respectively compared to the same period of the previous year.

Segment wise Consolidated PBIT margin of Iron and steel segment decreased by 330 bps to 18.4% while PBIT margin of power segment rose by 290 bps to 50.9%.

JSPL's standalone turnover, however declined by 9% due to a major up gradation programme of its Raigarh plant which was successfully completed by the end of September 2014. However, EBITDA level in Q2 increased from 28% in FY'14 to 34% in FY'15. PAT and Cash Profit, during Q2, increased 12% and 62% respectively. Although, JSPL's turnover during H1 dropped marginally, EBITDA margin in H1FY'15 rose to 35% compared to 27% in the same period of previous year. Both PAT and Cash Profit increased by 20% and 52% respectively in H1FY'15 as compared to same period last year.

While Raigarh Steel unit increased its capacity to 3.6 MTPA compared to the previous 3.0 MTPA, Coal Gasification Plant (CGP) and DRI units also achieved new highs in their performance. Although the company encountered major challenge in sourcing coal for CGP plant due to non-availability of its own local source, the plant achieved a capacity utilization level of 60%. JSPL's CGP + DRI plant are world's largest integrated plant based on syngas with a capacity of 1.8 MTPA. Although JSPL successfully commissioned its new Pelletisation plant in March 2014, the combined plant was operated 50% capacity utilization in view of limited iron ore availability. Consequently, Company's external sales of pellets witnessed a major drop.

The company's continued efforts to achieve higher NSR saw its NSR/ton of steel increase by 4.6% during Q2 compared to same quarter in FY'14. Retail business of the company increased by 3 folds in H1FY'15 compared to same period of the previous year.

Jindal Power , inspite of major problems in meeting its coal requirement for Tamnar Phase II units saw its Q2 sales and EBITDA grow by 39% and 21% respectively compared to the same quarter in the previous year. Three out of its four units are already commissioned, while the fourth unit would be commissioned before the end of the current financial year. Two of the four 600 MW each units already have the coal linkage while the remaining two, as per Government's commitment will be given fuel linkage before March 31, 2015. As per Supreme Court's recent judgement, the coal block of Tamnar Phase - I is cancelled but the company is making all possible efforts to secure the necessary coal blocks / linkage from the auction to be held shortly.

JSPL's Oman unit has been performing consistently well and during Q2FY'15 its turnover and PAT increased by 32% and 104% respectively. However, Company's WCL Australia coking coal mines continued to make losses due to operational reasons as well as low price levels. However, a major restructuring of its operations has been done which is expected to result in turnaround of business next year.

During the quarter, Angul division of the company has commenced its commercial production of 1.8 MTPA Direct Reduced Iron (DRI) plant including Coal gasification plant and a subsidiary in Oman has also achieved commercial production of 2 MTPA of steel making plant.

The Hon'ble Supreme court of India has cancelled number of coal blocks allocated to various entities which include nine coal blocks consisting of three operational and six under development allotted to the company. The company has filed review petition seeking review of the said order. Pendng decision of the review petition the company has no adjustments in the accounts.

Consolidated Quarterly Performance

The consolidated income from operations increased 6% to Rs 5143.09 crore in Q2FY'15 compared to Q2FY'14 as Iron and steel revenues fell by 1% to Rs 4003.39 crore and Power sales were up by 43% to Rs 1521.01 crore. The sales of others were down 33% to Rs 109.18 crore. The OPM increased 190 bps to 31.9% as cost of material consumed as a percentage of adjusted net sales fell 150 bps to 26.7% along with stores and spares consumed down 180 bps to 8.3% limited by 90 bps rise in other expenses to 18.9%, 110 bps increase in employee benefit expense to 5.3% and 290 bps increase in power and fuel expenses to 9.7%. purchase of stock in trade was flat at 0.6%.

Thus the operating profit rose by 13% to Rs 1640.04 crore. Other income was Rs 40.09 crore comared to negative of Rs 15.13 crore in the corresponding previous year quarter while interest cost rose 57% to Rs 598.64 crore. Depreciation increased 50% to Rs 650.32 crore. PBT fell 31% to Rs 431.17 crore. Effective rate of tax fell to 7.2% compared to 27.5% in the corresponding previous year period resulting 12% fall in PAT to Rs 400.11 crore. Considering minority interest and share of associate's net profit fell 2% during the quarter to Rs 441.83 crore.

Consolidated Half Year ended Performance

The consolidated income from operations increased 6% to Rs 9830.42 crore. The OPM increased 340 bps to 33.3% resulting into 18% increase in operating profit to Rs 3269.02 crore. Other income rose 70% to Rs 90.41 crore while interest cost was doubled to Rs 535.45 crore. Depreciation increased 54% to Rs 1317.44 crore. PBT fell 11% to Rs 1506.54 crore. Effective rate of tax fell to 7.6% from 9.9% resulting 9% fall in PAT to Rs 1391.3 crore. Considering minority interest and share of associate's net profit fell 7% during the year to Rs 1407.85 crore.

The scrip is currently trading at Rs 165

Jindal Steel and Power: Consolidated Results

Particulars 1409 (3) 1309 (3) Var (%) 1409 (6) 1309 (6) Var (%) 1403 (12) 1303 (12) Var (%)
Income from Operations 5143.09 4852.26 6 9830.42 9245.71 6 20004.04 19806.78 1
OPM(%) 31.9 30.0 33.3 29.9 33.7 38.4
OP 1640.04 1456.84 13 3269.02 2761.97 18 5776.4 6668.65 -13
OI 40.09 -15.13 -365 90.41 53.28 70 65.63 136.42 -52
PBIDT 1680.13 1441.71 17 3359.43 2815.25 19 5842.03 6805.07 -14
Interest 598.64 380.47 57 535.45 267.53 100 1500.82 858.28 75
PBDT 1081.49 1061.24 2 2823.98 2547.72 11 4341.21 5946.79 -27
Depreciation 650.32 433.84 50 1317.44 855.44 54 1829.2 1539.22 19
PBT before EO 431.17 627.4 -31 1506.54 1692.28 -11 2512.01 4407.57 -43
EO 0 0 0 0 0 574.12
PBT after EO 431.17 627.4 -31 1506.54 1692.28 -11 2512.01 3833.45 -34
Tax 31.06 172.46 -82 115.24 168.02 -31 618.21 921.83 -33
PAT 400.11 454.94 -12 1391.30 1524.26 -9 1893.80 2911.62 -35
Minority Interest 42.78 -9.16 13.29 -13.60 14.01 -41.71
Share of Profit/Loss of Associates excluding EO -1.06 6.29 3.26 6.62 2.55 40.2 -94
Net profit 441.83 452.07 -2 1407.85 1517.28 -7 1910.36 2910.11 -34
EPS(Rs)* 19.3 19.8 30.8 33.2 20.9 36.6
* Annualized on current equity of Rs 91.49 crore; Face Value of Rs 1
Figures in Rs crore
Var(%) exceeding 999 has been truncated to 999
LP : Loss to profit; PL : Profit to loss
EO: Extraordinary item
EPS is calculated after excluding EO and relevant tax
Source : Capitaline Corporate Database

 Jindal Steel_Power: Consolidated Segment wise Results

Particulars 1409 (3) 1309 (3) % of total Var (%) 1409 (6) 1309 (6) % of total Var (%) 1403 (12) 1303 (12) % of total Var (%)
Revenue:
Iron and Steel 4003.39 4026.48 71 -1 7831.48 7507.76 73 4 16439.98 16329.76 76 1
Power 1521.01 1063.40 27 43 2750.15 2140.25 26 28 4381.68 4559.96 20 -4
Others 109.18 163.66 2 -33 187.18 386.22 2 -52 838.77 534.3 4 57
Total 5633.58 5253.54 100 7 10768.81 10034.23 100 7 21660.43 21424.02 100 1
Less: Inter Segment Revenues 490.49 401.28 22 938.39 788.52 19 1656.39 1617.24 2
Net Revenue from operation 5143.09 4852.26 6 9830.42 9245.71 6 20004.04 19806.78 1
PBIT:
Iron and Steel 737.34 875.07 59 -16 1442.89 1,535.17 61 -6 3328.77 3915.44 133 -15
Power 774.37 510.67 62 52 1416.45 1036.22 60 37 2024.23 2378.86 81 -15
Others -266.78 -82.9 -21 222 -496.01 -108.01 -21 359 -148.84 -6.71 -6 2118
Total 1244.93 1302.84 100 -4 2363.33 2463.38 100 -4 5204.16 6287.59 207 -17
Less: Interest 598.64 380.47 57 1134.09 648.00 75 1500.82 858.28 75
Less: unallocable exp/Income 215.12 294.97 281.25 518.70 1191.33 1021.74
EO 0 574.12
Net Profit/Loss Before Tax 431.17 627.40 -31 947.99 1296.68 -27 2512.01 3833.45 -34
Capital Employed:
Iron and Steel 30,570.19 17120.17 131 79 30,570.19 17120.17 131 79 21,166.68 14955.84 94 42
Power 14,692.93 8207.06 63 79 14,692.93 8207.06 63 79 15,123.03 8474.22 67 78
Others 6,202.02 2321.04 27 167 6,202.02 2321.04 27 167 6,209.72 2118.58 27 193
Unallocated -28,105.31 -5191.28 441 -28,105.31 -5191.28 441 -19,888.89 0.00
Total Capital Employed 23359.83 22456.99 100 4 23359.83 22456.99 100 4 22610.54 25548.64 100 -12
Figures in Rs crore
Var (%) exceeding 999 has been truncated to 999
Source: Capitaline Corporate Database

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