Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
We hosted JSW Steel among other companies at the RBS China India Access meet. Following
are the highlights of the same
3.2mt blast furnace set to be commissioned by June 2011
Management noted that most of the new facilities are complete which will take JSW Steel's
total steel capacity from 7.8mt to 11mt. Coke oven-4 with capacity of 1.92mt, Sinter plant-3 of
5.75mt capacity and steel melting shop have been commissioned and the blast furnace is set
to be complete by June 2011.
Management sees sustainable EBITDA at US$175/t
Standalone EBITDA/t moved up sharply to US$211/t in 4QFY11. (US$167/t in FY11). While
this was due to a surge in volumes in the seasonally strong 4th quarter, management noted
that they believe EBITDA of US$175/t is sustainable, going forward.
Expects to achieve cost savings through iron ore beneficiation
Management expects to achieve savings through iron ore beneficiation, pellet plant, coke
oven and captive power facilities. The company has commissioned a 1500TPH beneficiation
plant which will enable it to use lower grade (48%-50%) iron ore as opposed to 62.5-63% Fe
which is being used currently. Currently, the company has only 17% of iron ore as captive and
sources the rest locally. The company has been seeing cost escalation on iron ore with
availability often patchy. Commissioning of the beneficiation plant should reduce the average
iron ore cost for the company, according to the company. With commissioning of new coke
oven and 300MW CPP, coke and captive power integration will continue at 100%.
Coking coal remains hot
However, the company continues to be dependent on imports for coking coal, sourcing ~80%
from Australia and rest from the US. International coking coal spot prices have remained firm
at over US$300/t.
US coking coal mine to provide 0.5mt of volumes
The company expects to start mining coking coal from its US mines by July-August 2011.
Management estimates the cost of production to be US$160/t and expect to export 0.5mt of
volumes to India. The company is actively looking to acquire coking coal assets globally in
order to secure the critical raw material needs of its expanding domestic steel capacity.
Management noted that they are looking at ticket sizes of US$300-500mn for coking coal
assets.
Chile iron ore mine operational; CoP at US$60/t FOB
The company commenced operations in its Chile iron ore mine in November 2010 and
shipped the first consignment in April 2011. Management expects the cost of production to be
US$60/t FOB.
Production growth muted so far in 1QFY12
On the demand front, May and June production have been muted. The company posted a
production of 0.57mt in May, a 2% yoy growth. Management noted that imports have
remained soft even as international prices have converged to domestic prices. A Rs500/t
price increase was being considered in June, but has since been deferred. Over the longer
term, management was confident of a 10-11% steel consumption growth sustaining in India.
Integration with Ispat Industries on track
Integration with Ispat Industries continues and JSW Steel is looking to optimize costs through
reduced imports of pellets/coke. Debt refinancing should further ease the financial stress,
according to management.
US pipe and plate mill operations improving
Management was also hopeful for a turnaround at its US pipe and plate mill operations. Its
management has been changed and a better sourcing model for slabs is now in place. The
company is seeing the plate mill market improving and is also seeing better enquiries for
pipes.
Vijayanagar brownfield expansion to 12mt by June 2013
The Vijayanagar brownfield expansion to 12mt through debottlenecking is expected to be
completed by June 2013 at a total project cost of Rs27bn. (funded at 2:1 debt:equity). It has
ordered major equipment for the cold rolling mill, completed 15% excavation and tied up
financing.
We have a Sell on JSW Steel with TP of Rs828
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
We hosted JSW Steel among other companies at the RBS China India Access meet. Following
are the highlights of the same
3.2mt blast furnace set to be commissioned by June 2011
Management noted that most of the new facilities are complete which will take JSW Steel's
total steel capacity from 7.8mt to 11mt. Coke oven-4 with capacity of 1.92mt, Sinter plant-3 of
5.75mt capacity and steel melting shop have been commissioned and the blast furnace is set
to be complete by June 2011.
Management sees sustainable EBITDA at US$175/t
Standalone EBITDA/t moved up sharply to US$211/t in 4QFY11. (US$167/t in FY11). While
this was due to a surge in volumes in the seasonally strong 4th quarter, management noted
that they believe EBITDA of US$175/t is sustainable, going forward.
Expects to achieve cost savings through iron ore beneficiation
Management expects to achieve savings through iron ore beneficiation, pellet plant, coke
oven and captive power facilities. The company has commissioned a 1500TPH beneficiation
plant which will enable it to use lower grade (48%-50%) iron ore as opposed to 62.5-63% Fe
which is being used currently. Currently, the company has only 17% of iron ore as captive and
sources the rest locally. The company has been seeing cost escalation on iron ore with
availability often patchy. Commissioning of the beneficiation plant should reduce the average
iron ore cost for the company, according to the company. With commissioning of new coke
oven and 300MW CPP, coke and captive power integration will continue at 100%.
Coking coal remains hot
However, the company continues to be dependent on imports for coking coal, sourcing ~80%
from Australia and rest from the US. International coking coal spot prices have remained firm
at over US$300/t.
US coking coal mine to provide 0.5mt of volumes
The company expects to start mining coking coal from its US mines by July-August 2011.
Management estimates the cost of production to be US$160/t and expect to export 0.5mt of
volumes to India. The company is actively looking to acquire coking coal assets globally in
order to secure the critical raw material needs of its expanding domestic steel capacity.
Management noted that they are looking at ticket sizes of US$300-500mn for coking coal
assets.
Chile iron ore mine operational; CoP at US$60/t FOB
The company commenced operations in its Chile iron ore mine in November 2010 and
shipped the first consignment in April 2011. Management expects the cost of production to be
US$60/t FOB.
Production growth muted so far in 1QFY12
On the demand front, May and June production have been muted. The company posted a
production of 0.57mt in May, a 2% yoy growth. Management noted that imports have
remained soft even as international prices have converged to domestic prices. A Rs500/t
price increase was being considered in June, but has since been deferred. Over the longer
term, management was confident of a 10-11% steel consumption growth sustaining in India.
Integration with Ispat Industries on track
Integration with Ispat Industries continues and JSW Steel is looking to optimize costs through
reduced imports of pellets/coke. Debt refinancing should further ease the financial stress,
according to management.
US pipe and plate mill operations improving
Management was also hopeful for a turnaround at its US pipe and plate mill operations. Its
management has been changed and a better sourcing model for slabs is now in place. The
company is seeing the plate mill market improving and is also seeing better enquiries for
pipes.
Vijayanagar brownfield expansion to 12mt by June 2013
The Vijayanagar brownfield expansion to 12mt through debottlenecking is expected to be
completed by June 2013 at a total project cost of Rs27bn. (funded at 2:1 debt:equity). It has
ordered major equipment for the cold rolling mill, completed 15% excavation and tied up
financing.
We have a Sell on JSW Steel with TP of Rs828
No comments:
Post a Comment