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Jindal Steel & Power
Jindal Power FY11 results
Jindal Steel and Power (JSP) filed the summary of the FY11 financial results of its
merchant power subsidiary Jindal Power Limited, earlier today. Results were inline with our expectations. JSP reports on April 21 which should give clarity on
steel business results, update on project pipeline and JPL IPO plans.
Earnings-line with expectations
! Net revenues of Jindal Power Limited (JPL) for FY11 were Rs33.3bn (-15% yoy), in-line with
our estimate of Rs33.0bn. Plant load factor (PLF) was 98.1% for FY11 increasing by 514bps
yoy. The plant has been operating at over 100% capacity in the last two quarters. (PLF was
95.2% in 1HFY11). The decline in yoy revenues, despite higher PLF's is due to lower tariff
realizations (Rs3.8/unit for FY11 versus Rs5.1/unit for FY10). This is mainly a function of the
merchant power market with over 70% sold on a spot basis. Average merchant tariffs
reported by the Indian Energy Exchange have declined to Rs3.5/unit in FY11 versus
Rs5.2/unit in FY10, with new power capacity coming on-line and greater financial discipline by
the key buyers, the State Electricity Boards. Net profit was Rs20.0bn (-14% yoy), 2% higher
than our estimate of Rs19.6bn.
We estimate JSP's FY11 consolidated EBITDA at Rs65.3bn
! JSP is due to report its 4Q and FY11 results on April 21. We estimate net revenues of
Rs128.7bn, EBITDA of Rs65.3bn and net profit of Rs39.4bn for FY11.
Jindal Power IPO soon?
! We note that the exchange filing mentions that JPL is proposing an initial public offering
subject to approvals. Management did highlight during the 3QFY11 earnings call that they
expect to come out with an IPO soon from JPL to fund their ambitious power project plans.
We believe the JPL IPO could be a key catalyst for the JSP stock as the market begins to
focus on the JPL pipeline in the FY14-15 timeframe including the 2400MW Tamnar II and
1980MW Jharkhand CPP's.
! JSP is our top pick in the Indian steel space. We have a Buy rating on JSP with target price of
Rs820.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Jindal Steel & Power
Jindal Power FY11 results
Jindal Steel and Power (JSP) filed the summary of the FY11 financial results of its
merchant power subsidiary Jindal Power Limited, earlier today. Results were inline with our expectations. JSP reports on April 21 which should give clarity on
steel business results, update on project pipeline and JPL IPO plans.
Earnings-line with expectations
! Net revenues of Jindal Power Limited (JPL) for FY11 were Rs33.3bn (-15% yoy), in-line with
our estimate of Rs33.0bn. Plant load factor (PLF) was 98.1% for FY11 increasing by 514bps
yoy. The plant has been operating at over 100% capacity in the last two quarters. (PLF was
95.2% in 1HFY11). The decline in yoy revenues, despite higher PLF's is due to lower tariff
realizations (Rs3.8/unit for FY11 versus Rs5.1/unit for FY10). This is mainly a function of the
merchant power market with over 70% sold on a spot basis. Average merchant tariffs
reported by the Indian Energy Exchange have declined to Rs3.5/unit in FY11 versus
Rs5.2/unit in FY10, with new power capacity coming on-line and greater financial discipline by
the key buyers, the State Electricity Boards. Net profit was Rs20.0bn (-14% yoy), 2% higher
than our estimate of Rs19.6bn.
We estimate JSP's FY11 consolidated EBITDA at Rs65.3bn
! JSP is due to report its 4Q and FY11 results on April 21. We estimate net revenues of
Rs128.7bn, EBITDA of Rs65.3bn and net profit of Rs39.4bn for FY11.
Jindal Power IPO soon?
! We note that the exchange filing mentions that JPL is proposing an initial public offering
subject to approvals. Management did highlight during the 3QFY11 earnings call that they
expect to come out with an IPO soon from JPL to fund their ambitious power project plans.
We believe the JPL IPO could be a key catalyst for the JSP stock as the market begins to
focus on the JPL pipeline in the FY14-15 timeframe including the 2400MW Tamnar II and
1980MW Jharkhand CPP's.
! JSP is our top pick in the Indian steel space. We have a Buy rating on JSP with target price of
Rs820.
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