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Jindal Steel and Power Limited
1Q results: below expectation
„1Q results: power & steel profits disappoint, Underperform
Consol. PAT declined 7%QoQ to Rs9.2bn vs. Rs11.4bn est. This was led by 1)
lower JPL PAT; 2) lower standalone PAT due to lower steel vols., captive power
sales & higher interest costs. Merchant power tariff continues to decline exerting
pressure on power profits. Captive power ramp up has been slow & other projects
are delayed. Visibility on Godda / Dumka projects, already in our valuation is low
& may lead to downside risks. Domestic steel outlook has moderated. Valuations
at 9.2x FY12e EBITDA & close to NPV appears full. Hence Underperform.
JPL disappoint on lower power tariff
JPL PAT was Rs4.5bn (-9%QoQ), 13% below our est. as tariff declined 9%QoQ
to Rs3.76/kwh due to weaker power fundamentals. Avg. PLF was 99% (4QFY11
101%). JSPL guided to merchant tariff of Rs3.8-4.25/kwh in FY12. JPL plans to
shut down 2 units (250MW each) in during the seasonally weak Sept Q.
Standalone PAT down 18%QoQ to Rs4.7bn, 15% below est.
Steel shipments was 0.46mt (-14%QoQ) vs. production of 0.61mt. Inventories
increased 0.15mt QoQ to 0.3mt. Pellet sales were robust at 0.35mt (54%QoQ.)
Captive power units declined 7%QoQ in 1Q. Avg. PLF at new units (2x135MW)
remains low at ~50%. Power from new captive power units is being consumed
internally to produce steel. This is not adding to profits currently as shipments lag
production and incremental volumes is adding to inventories.
Key takeaways from management call
In 1Q, Shadeed Steel volumes were 0.3mt (~75% utilization) & PAT was
US$8mn. Mgmt expects to sell 2.25mt of pellets in FY12 (50% domestic). It
expects to complete remaining 7x135MW captive power expansion in FY12.
Tamnar II Phase I (1200MW) construction is expected to start soon after the pre
conditions are met. JSPL has also started shipments from Bolivia iron ore mines.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Jindal Steel and Power Limited
1Q results: below expectation
„1Q results: power & steel profits disappoint, Underperform
Consol. PAT declined 7%QoQ to Rs9.2bn vs. Rs11.4bn est. This was led by 1)
lower JPL PAT; 2) lower standalone PAT due to lower steel vols., captive power
sales & higher interest costs. Merchant power tariff continues to decline exerting
pressure on power profits. Captive power ramp up has been slow & other projects
are delayed. Visibility on Godda / Dumka projects, already in our valuation is low
& may lead to downside risks. Domestic steel outlook has moderated. Valuations
at 9.2x FY12e EBITDA & close to NPV appears full. Hence Underperform.
JPL disappoint on lower power tariff
JPL PAT was Rs4.5bn (-9%QoQ), 13% below our est. as tariff declined 9%QoQ
to Rs3.76/kwh due to weaker power fundamentals. Avg. PLF was 99% (4QFY11
101%). JSPL guided to merchant tariff of Rs3.8-4.25/kwh in FY12. JPL plans to
shut down 2 units (250MW each) in during the seasonally weak Sept Q.
Standalone PAT down 18%QoQ to Rs4.7bn, 15% below est.
Steel shipments was 0.46mt (-14%QoQ) vs. production of 0.61mt. Inventories
increased 0.15mt QoQ to 0.3mt. Pellet sales were robust at 0.35mt (54%QoQ.)
Captive power units declined 7%QoQ in 1Q. Avg. PLF at new units (2x135MW)
remains low at ~50%. Power from new captive power units is being consumed
internally to produce steel. This is not adding to profits currently as shipments lag
production and incremental volumes is adding to inventories.
Key takeaways from management call
In 1Q, Shadeed Steel volumes were 0.3mt (~75% utilization) & PAT was
US$8mn. Mgmt expects to sell 2.25mt of pellets in FY12 (50% domestic). It
expects to complete remaining 7x135MW captive power expansion in FY12.
Tamnar II Phase I (1200MW) construction is expected to start soon after the pre
conditions are met. JSPL has also started shipments from Bolivia iron ore mines.
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