Jindal Steel & Power (Q1 FY13)

India Infoline News Service | Mumbai |

Q4 FY12 standalone revenue of Rs33.3bn was quite lower than our estimate on account of lower sales of steel and pellets

CMP Rs397, Target Rs540, Upside 36.1%
 
  • Q4 FY12 standalone revenue of Rs33.3bn was quite lower than our estimate on account of lower sales of steel and pellets
  • JSPL witnessed inventory buildup during the quarter due to tight liquidity situation at its customers
  • Production of steel remained strong at 0.77mn tons and that of pellet at 1mn tons.
  • However, pellet sales volume plunged 42.7% qoq and that of finished steel declined 23.8% qoq
  • Operating profit of Rs10.3bn was lower than our estimate due to lower volumes and a forex loss of Rs1.4bn included in other expenditure
  • JPL’s PAT was impacted by a provisioning of Rs1bn for an electricity duty dispute. Average power realizations under JPL decreased on a qoq basis from Rs3.96/unit in Q4 FY12 to Rs3.77/unit
  • Recent correction unwarranted; Maintain BUY with a revised 9-month price target of Rs540 
Result table (Standalone)
(Rs mn) Q1 FY13  Q4 FY12 % qoq Q1 FY12 % yoy
Net sales 33,311 41,740 (20.2) 25,269 31.8
Material costs (9,702) (17,130) (43.4) (6,682) 45.2
Power and fuel costs (2,955) (2,773) 6.6 (1,888) 56.5
Personnel costs (1,117) (1,183) (5.5) (881) 26.9
Other overheads (9,160) (7,563) 21.1 (6,181) 48.2
Operating profit 10,377 13,093 (20.7) 9,638 7.7
OPM (%) 31.2 31.4 (21) bps 38.1 (699) bps
Depreciation (2,372) (2,364) 0.3 (2,066) 14.8
Interest (2,186) (2,490) (12.2) (1,325) 65.0
Other income 122 1,412 (91.4) 163 (24.9)
PBT 5,942 9,650 (38.4) 6,410 (7.3)
Tax (76) (1,814) (95.8) (1,709) (95.5)
Effective tax rate (%) 1.3 18.8   26.7  
Adjusted PAT 5,865 7,836 (25.1) 4,702 24.8
Adj. PAT margin (%) 17.6 18.8 (117) bps 18.6 (100) bps
Extra ordinary item (5,741) - - - -
Reported PAT 124 7,836 (98.4) 4,702 (97.4)
Ann. EPS (Rs) 25.1 33.5 (25.1) 20.1 24.8
Source: Company, India Infoline Research

Topline lower than estimate due to inventory buildup

JSPL’s standalone Q4 FY12 revenue declined 20.2% qoq to Rs33.3bn, lower than our estimate of Rs38.1bn. The underperformance was on account of lower sales of steel and pellets. JSPL witnessed inventory buildup during the quarter due to tight liquidity situation at its customers. Pellet sales plunged 42.7% qoq and that of finished steel declined 23.8% qoq. However, production of steel remained strong at 0.77mn tons and that of pellet was strong at 1mn tons. Power production power volumes increased from 1,417mn units in Q4 FY12 to 1,516mn units on the back of higher PLFs from the new facilities. External power sales increased 4.8% qoq to 584mn units, lower than the 7% qoq growth witnessed in power production. Average power realization in the standalone entity surprisingly increased from Rs3.7/unit in Q4 FY12 to Rs3.95/unit during the quarter.


Production and sales volume
  Q1 FY13  Q4 FY12 % qoq Q1 FY12 % yoy
Production          
Sponge iron 374,683 304,314 23.1 363,653 3.0
Pig iron 484,492 393,853 23.0 402,107 20.5
Steel products 765,587 762,971 0.3 607,726 26.0
Pellets 1,006,080 1,071,770 (6.1) 828,800 21.4
Power 1,516 1,417 7.0 931 62.8
Sales          
Sponge iron 1,925 25,285 (92.4) - -
Pig iron - 2,614 - - -
BSE 163.75 [1.20] ([0.73]%)
NSE 163.65 [1.75] ([1.06]%)

***Note: This is a NSE Chart

 

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