Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
JSPL------------------------------------------------------------------------------ Maintain OUTPERFORM
Significant jump in steel profits in FY12
● Results were ahead of EBITDA estimates by 8% due to: 1) higher
power sales volume (PLF 101% at Tamnar); and 2) higher pellet
sales (~200kt vs CS ~80kt), offset by lower steel volume.
● Average merchant realisation was Rs4.28, a differential of Rs 1.87
over the IEX average rate for the quarter. The two units of 1,350
MW captive power are still stabilising and 3Q11 PLF was low at
35% (4Q target 70%). We have pushed out our ramp estimates.
● We raise FY12 JSPL steel price forecasts in line with our industry
estimates – due to iron ore integration and 50% DRI-based
production where it uses its own thermal coal, leading to a
substantial increase in steel EBITDA and steel valuation.
● We also lower our FY12/13 merchant power price forecasts to
Rs4.2/kWh (blended Rs3.9) from Rs5.2. JSPL expects a Rs3.75-
4.5 range in FY12. For FY13 onwards we maintain Rs4. We
believe these may surprise on the upside.
● Our FY11-13 estimates change by -6%/0%/-7%. Our steel
business value rises and for the power business (DCF-based)
falls slightly. TP raised from Rs730 to Rs810. Maintain an
Outperform.
Results marginally ahead
Results were ahead of estimates at the EBITDA level by 8% due to:
1) higher power volume sales (PLF 101%); 2) higher-than-expected
pellet sales (~200kt versus CS’ estimate of ~80kt) partly offset by
lower sales of iron ore fines and steel volumes. Average merchant
realisation was Rs4.28, a differential of Rs1.87 over the IEX average
rate for the quarter.
The first two units of 1,350 MW capacity are still under stabilisation
and 3Q11 PLF was low at 35% but expected to improve in 4Q to 70%.
Steel price hikes increase valuations, TP raised to Rs810
We raise JSPL steel price forecasts in line with our industry estimates.
As JSPL is vertically integrated on iron ore and 50% of its production
is DRI based, most of this increase flows down to the EBITDA level.
This has a material impact on the steel business valuation – although
this still remains a small part of the overall valuation.
We also lower our FY12/13 merchant price forecasts to Rs4.2
(blended Rs3.9) from Rs5.2. FY13 onwards we maintain Rs4/kWh.
JSPL expects merchant prices to remain at Rs3.75-4.5 in FY12.
Our FY11 estimate falls 6%; an FY12 steel profit jump offsets the
decline in power profitability and FY13 EPS falls 7% as by then we
expect steel prices to come down. Near-term earnings do not impact
our power valuations as much, which are DCF-based. We increase
our target price from Rs730 to Rs810.
Key takeaways from conference call
● Pellet sales: To continue until captive consumption increases, as
they are highly profitable. JSPL expects capacity utilisation to run
at ~90%.
● Steel sales: FY12 volume guidance is ~2.5 mn tonnes. Shadeed
trial production has begun, but 4Q11 contribution not significant.
● JSPL would like to sell power though six to 12-month PPAs, and
still feels it is too early to get into 15-20-year PPAs.
● Coal supply: With CIL delivering only about ~60% of linkage
commitments, e-auctions and coal imports to be used for the
2,400MW plant when commissioned. Captive mining in South
Africa has started.
● Bolivia: Mining has started and logistics issues are being sorted
out. Ramp-up should be easier once logistics are in place.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
JSPL------------------------------------------------------------------------------ Maintain OUTPERFORM
Significant jump in steel profits in FY12
● Results were ahead of EBITDA estimates by 8% due to: 1) higher
power sales volume (PLF 101% at Tamnar); and 2) higher pellet
sales (~200kt vs CS ~80kt), offset by lower steel volume.
● Average merchant realisation was Rs4.28, a differential of Rs 1.87
over the IEX average rate for the quarter. The two units of 1,350
MW captive power are still stabilising and 3Q11 PLF was low at
35% (4Q target 70%). We have pushed out our ramp estimates.
● We raise FY12 JSPL steel price forecasts in line with our industry
estimates – due to iron ore integration and 50% DRI-based
production where it uses its own thermal coal, leading to a
substantial increase in steel EBITDA and steel valuation.
● We also lower our FY12/13 merchant power price forecasts to
Rs4.2/kWh (blended Rs3.9) from Rs5.2. JSPL expects a Rs3.75-
4.5 range in FY12. For FY13 onwards we maintain Rs4. We
believe these may surprise on the upside.
● Our FY11-13 estimates change by -6%/0%/-7%. Our steel
business value rises and for the power business (DCF-based)
falls slightly. TP raised from Rs730 to Rs810. Maintain an
Outperform.
Results marginally ahead
Results were ahead of estimates at the EBITDA level by 8% due to:
1) higher power volume sales (PLF 101%); 2) higher-than-expected
pellet sales (~200kt versus CS’ estimate of ~80kt) partly offset by
lower sales of iron ore fines and steel volumes. Average merchant
realisation was Rs4.28, a differential of Rs1.87 over the IEX average
rate for the quarter.
The first two units of 1,350 MW capacity are still under stabilisation
and 3Q11 PLF was low at 35% but expected to improve in 4Q to 70%.
Steel price hikes increase valuations, TP raised to Rs810
We raise JSPL steel price forecasts in line with our industry estimates.
As JSPL is vertically integrated on iron ore and 50% of its production
is DRI based, most of this increase flows down to the EBITDA level.
This has a material impact on the steel business valuation – although
this still remains a small part of the overall valuation.
We also lower our FY12/13 merchant price forecasts to Rs4.2
(blended Rs3.9) from Rs5.2. FY13 onwards we maintain Rs4/kWh.
JSPL expects merchant prices to remain at Rs3.75-4.5 in FY12.
Our FY11 estimate falls 6%; an FY12 steel profit jump offsets the
decline in power profitability and FY13 EPS falls 7% as by then we
expect steel prices to come down. Near-term earnings do not impact
our power valuations as much, which are DCF-based. We increase
our target price from Rs730 to Rs810.
Key takeaways from conference call
● Pellet sales: To continue until captive consumption increases, as
they are highly profitable. JSPL expects capacity utilisation to run
at ~90%.
● Steel sales: FY12 volume guidance is ~2.5 mn tonnes. Shadeed
trial production has begun, but 4Q11 contribution not significant.
● JSPL would like to sell power though six to 12-month PPAs, and
still feels it is too early to get into 15-20-year PPAs.
● Coal supply: With CIL delivering only about ~60% of linkage
commitments, e-auctions and coal imports to be used for the
2,400MW plant when commissioned. Captive mining in South
Africa has started.
● Bolivia: Mining has started and logistics issues are being sorted
out. Ramp-up should be easier once logistics are in place.
No comments:
Post a Comment