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UBS Investment Research
JSW Steel
Q 4 numbers ahead of estimates
Event: Numbers beat estimates due to higher than expected ASPs
Q4 standalone PAT at Rs8.3bn (+34%YoY, +118%QoQ, UBS-e est Rs5.9bn / cons
est. Rs6.3bn) and EBITDA at Rs15.8bn (+22%YoY, +64%QoQ, UBS-e Rs13.2bn,
cons est. Rs14.2bn) were driven by higher net sales of Rs70.3bn (+36%YoY,
+22%QoQ, UBS-e Rs68.2bn). ASPs increased 12% QoQ at US$903/t (UBS-e
US$875/t). EBITDA/t increased 51% QoQ to US$203/t (UBS-e US$169/t). Cons
PAT increased 30% YoY to Rs7.9bn in part driven by positive contribution from
Ispat. Ispat’s Q4 PAT was Rs0.7bn (+214%YoY).
Impact: Not a game changer; Q1FY12 to be a dampener due to coking coal
While results have been higher than estimates we believe this per se is not
significant. Q1FY12 results are likely to be weak given the impact of higher coking
coal costs of US$330/t (vs US$225/t) impacting EBITDA/t by US$84. Board has
approved 2mt Brownfield expansion in Vijaynagar (from 10mt to 12mt) at cost of
Rs26.95bn (US$600mn). Expected completion by June 2013 (funding D/E 35:65).
Action: Maintain our earnings estimates for FY12/13
We don’t change our earnings estimates for FY12/13. We are assuming 8.64mt of
steel sales in FY12 (management guidance of 9mt) and 10.2mt in FY13. We expect
EBITDA of US$137/175 in FY12/13. Gross debt is US$3.66bn (Rs164.74bn), net
debt is US$3.15bn (Rs141.56bn) while cons D/E is 0.84x (1.65x in FY10 end).
Valuation: Maintain Buy and price target of Rs1300
We continue to value JSW Steel on a sum-of-the-parts basis with the core business
at a mid-cycle multiple of 6.7x EV/EBITDA using normalized FY12-13 EBITDA
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
JSW Steel
Q 4 numbers ahead of estimates
Event: Numbers beat estimates due to higher than expected ASPs
Q4 standalone PAT at Rs8.3bn (+34%YoY, +118%QoQ, UBS-e est Rs5.9bn / cons
est. Rs6.3bn) and EBITDA at Rs15.8bn (+22%YoY, +64%QoQ, UBS-e Rs13.2bn,
cons est. Rs14.2bn) were driven by higher net sales of Rs70.3bn (+36%YoY,
+22%QoQ, UBS-e Rs68.2bn). ASPs increased 12% QoQ at US$903/t (UBS-e
US$875/t). EBITDA/t increased 51% QoQ to US$203/t (UBS-e US$169/t). Cons
PAT increased 30% YoY to Rs7.9bn in part driven by positive contribution from
Ispat. Ispat’s Q4 PAT was Rs0.7bn (+214%YoY).
Impact: Not a game changer; Q1FY12 to be a dampener due to coking coal
While results have been higher than estimates we believe this per se is not
significant. Q1FY12 results are likely to be weak given the impact of higher coking
coal costs of US$330/t (vs US$225/t) impacting EBITDA/t by US$84. Board has
approved 2mt Brownfield expansion in Vijaynagar (from 10mt to 12mt) at cost of
Rs26.95bn (US$600mn). Expected completion by June 2013 (funding D/E 35:65).
Action: Maintain our earnings estimates for FY12/13
We don’t change our earnings estimates for FY12/13. We are assuming 8.64mt of
steel sales in FY12 (management guidance of 9mt) and 10.2mt in FY13. We expect
EBITDA of US$137/175 in FY12/13. Gross debt is US$3.66bn (Rs164.74bn), net
debt is US$3.15bn (Rs141.56bn) while cons D/E is 0.84x (1.65x in FY10 end).
Valuation: Maintain Buy and price target of Rs1300
We continue to value JSW Steel on a sum-of-the-parts basis with the core business
at a mid-cycle multiple of 6.7x EV/EBITDA using normalized FY12-13 EBITDA
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