Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Jindal Steel and Power (JSP)
Metals & Mining
Earnings miss on lower-than-expected steel realizations. JSP reported consolidated
EBITDA of Rs16 bn, 5% lower than our estimate. Net income of Rs9.5 bn was 7.8%
lower than our estimate. JPL performance was in line with our estimate while steel
business performance was about 7% lower than our estimate. Lower-than-expected
realizations in steel business accounted for most of the miss. We will review our
estimates and TP post quarterly earnings call. REDUCE rating stays.
JSP – 7.8% earnings miss at the consolidated level
Jindal Steel and Power (JSP) reported 3QFY11 standalone EBITDA of Rs9.4 bn (+9.3% qoq, 51.2%
yoy), 6.5% lower than our estimate. Reported standalone net income grew 5% qoq and 54.1%
yoy to Rs5 bn but missed our estimate by 12.3%. Miss at the consolidated level was largely on
account of steel division performance. On a consolidated level, EBITDA at Rs16 bn grew 10.2%
yoy and net income at Rs9.5 bn grew 8.8% yoy.
Surprising dip in steel segment realizations
Realization/ton declined 3% qoq to Rs46,106/ton (computed by dividing steel segment revenues
with steel product sales), surprising noting (1) average steel prices increased by about US$15-20/
ton for December quarter and September quarter and (2) sharp increase in pellet sales to 200K
tons from 12K tons in 2QFY11. We would seek clarifications on the same though this can be
attributed to change in mix of steel product deliveries.
Steel deliveries continued to be strong during the quarter, growing 8.8% qoq and 27% yoy to
503K tons. Metallics sales were strong at 93K tons, up 223% qoq. Pellet sales also increased
during the quarter to 200K tons as against a modest 12K tons in 2QFY11; average realizations for
pellets was Rs6,500/ton in 3QFY11.
JPL – healthy generation compensates for sedate merchant rates
Jindal Power (JPL) reported 3QFY11 net sales of Rs8 bn (-17% yoy, 1.3% qoq) and PAT of Rs4.9
bn (-16% yoy, 6% qoq) against our estimates of Rs8.3 bn and Rs4.9 bn. Lower-than estimated
revenues were primarily on account of weak merchant realizations at Rs3.9/kwh (-22% yoy, -10%
qoq) against our estimate of Rs4.1/kwh (assuming auxiliary consumption of 8%). Healthy
generation growth (5.6% yoy, 13% qoq) driven by an impressive PLF of 101% and lower-thanestimated
cost resulted in in-line PAT. We note that our model currently factors in a merchant
realization of Rs4.8/kwh in FY2011E and FY2012E and we will revisit our estimates (post the
analyst call) to account for the continued weakness in the short-term market.
Update on Shadeed Iron DRI plant
Shadeed Iron has commenced commercial production w.e.f. from Jan 1, 2011. It is running
at a capacity of approx. 70%, in our view. Note that Shadeed Iron was acquired in July 2010
and has a capacity of 1.5 mtpa of hot briquetted iron. Shadeed is sourcing iron ore from
Vale and other miners. Shadeed has also into entered into a firm agreement for gas supply
at US$1/mn BTU; Shadeed will require 10 mmbtu for producing a ton of sponge iron.
Review estimates post quarterly earnings call
We will revisit earnings estimates post quarterly earnings call. We will specifically seek clarity
on status of expansion of various steel projects and overseas expansion, particularly in Bolivia.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Jindal Steel and Power (JSP)
Metals & Mining
Earnings miss on lower-than-expected steel realizations. JSP reported consolidated
EBITDA of Rs16 bn, 5% lower than our estimate. Net income of Rs9.5 bn was 7.8%
lower than our estimate. JPL performance was in line with our estimate while steel
business performance was about 7% lower than our estimate. Lower-than-expected
realizations in steel business accounted for most of the miss. We will review our
estimates and TP post quarterly earnings call. REDUCE rating stays.
JSP – 7.8% earnings miss at the consolidated level
Jindal Steel and Power (JSP) reported 3QFY11 standalone EBITDA of Rs9.4 bn (+9.3% qoq, 51.2%
yoy), 6.5% lower than our estimate. Reported standalone net income grew 5% qoq and 54.1%
yoy to Rs5 bn but missed our estimate by 12.3%. Miss at the consolidated level was largely on
account of steel division performance. On a consolidated level, EBITDA at Rs16 bn grew 10.2%
yoy and net income at Rs9.5 bn grew 8.8% yoy.
Surprising dip in steel segment realizations
Realization/ton declined 3% qoq to Rs46,106/ton (computed by dividing steel segment revenues
with steel product sales), surprising noting (1) average steel prices increased by about US$15-20/
ton for December quarter and September quarter and (2) sharp increase in pellet sales to 200K
tons from 12K tons in 2QFY11. We would seek clarifications on the same though this can be
attributed to change in mix of steel product deliveries.
Steel deliveries continued to be strong during the quarter, growing 8.8% qoq and 27% yoy to
503K tons. Metallics sales were strong at 93K tons, up 223% qoq. Pellet sales also increased
during the quarter to 200K tons as against a modest 12K tons in 2QFY11; average realizations for
pellets was Rs6,500/ton in 3QFY11.
JPL – healthy generation compensates for sedate merchant rates
Jindal Power (JPL) reported 3QFY11 net sales of Rs8 bn (-17% yoy, 1.3% qoq) and PAT of Rs4.9
bn (-16% yoy, 6% qoq) against our estimates of Rs8.3 bn and Rs4.9 bn. Lower-than estimated
revenues were primarily on account of weak merchant realizations at Rs3.9/kwh (-22% yoy, -10%
qoq) against our estimate of Rs4.1/kwh (assuming auxiliary consumption of 8%). Healthy
generation growth (5.6% yoy, 13% qoq) driven by an impressive PLF of 101% and lower-thanestimated
cost resulted in in-line PAT. We note that our model currently factors in a merchant
realization of Rs4.8/kwh in FY2011E and FY2012E and we will revisit our estimates (post the
analyst call) to account for the continued weakness in the short-term market.
Update on Shadeed Iron DRI plant
Shadeed Iron has commenced commercial production w.e.f. from Jan 1, 2011. It is running
at a capacity of approx. 70%, in our view. Note that Shadeed Iron was acquired in July 2010
and has a capacity of 1.5 mtpa of hot briquetted iron. Shadeed is sourcing iron ore from
Vale and other miners. Shadeed has also into entered into a firm agreement for gas supply
at US$1/mn BTU; Shadeed will require 10 mmbtu for producing a ton of sponge iron.
Review estimates post quarterly earnings call
We will revisit earnings estimates post quarterly earnings call. We will specifically seek clarity
on status of expansion of various steel projects and overseas expansion, particularly in Bolivia.
No comments:
Post a Comment