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Key Takeaways
Angul steel project, captive power plant (10x 135MW) delayed
Jindal Steel and Power (JSP) expect five units of its 135MW unit to be commissioned
in FY12 and the remaining two units are expected to be commissioned in FY13.
The two units of 135MW already commissioned at Tamnar are still facing teething
problems due to the high ash content in the coal middlings. JSP is mixing coal with
these middlings and the plants are expected to stabilize in two months. One unit of
135MW, commissioned at Angul stabilized recently.
A 2mtpa gas-based DRI plant is expected to be commissioned by September 2012.
Earlier JSP planned to commission a 1.5mtpa plate mill and DRI unit by March 2012.
As most of the clearances for its captive mine at Angul (Utkal B1) are in place, JSP
expects to start production in six months.
First unit of 600MW Tamnar II project to be commissioned by October 2013
Jindal power's expansion at Tamnar, where JSP is setting up a 2,400MW power
project, is still on hold. JSP has received environment clearance for the project
subject to the coal tie up/linkage, but it has yet to receive consent to establish.
For first phase of the 1,200MW, JSP has received coal linkages. For the next phase
of 1200MW, the coal will be sourced from Jindal Steel, Mozambique.
The company expects to receive final environment clearance and consent to establish
for the first phase by October 2011. It has spent ~INR16b on the project and the
first unit of 600MW is expected to be commissioned in 24 months from the date of
receipt of the consent to establish.
Play on rich resources
JSP recently received a mining lease for four coking coal mines in Queensland,
Australia for which it had applied about two year ago. Initial drilling has begun.
JSP has also acquired 27.3% stake in Rockland Richfield, which has ~700mt of
coking coal reserves. JSP made an open offer for further purchase of stake and
increased control in the company (valuing it at USD88m).
The first shipment of iron ore from Bolivia is expected in a few weeks. The company
expects 0.5m ton of volumes in FY12 with net margins of USD50/ton at current iron
ore prices.
Commissioning of DRI project, Angul coal mine near-term triggers; Buy
The earnings growth in FY12 will be subdued due to delay in ramping up of captive
power plants. The merchant power rates in forward market have started improving,
which will boost the earnings in FY13.
We remain positive on the stock due to its rich portfolio of coal and iron ore resources.
JSP has been able to deliver superior earnings growth through judicious capital
allocation in high margin businesses. Maintain Buy.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Key Takeaways
Angul steel project, captive power plant (10x 135MW) delayed
Jindal Steel and Power (JSP) expect five units of its 135MW unit to be commissioned
in FY12 and the remaining two units are expected to be commissioned in FY13.
The two units of 135MW already commissioned at Tamnar are still facing teething
problems due to the high ash content in the coal middlings. JSP is mixing coal with
these middlings and the plants are expected to stabilize in two months. One unit of
135MW, commissioned at Angul stabilized recently.
A 2mtpa gas-based DRI plant is expected to be commissioned by September 2012.
Earlier JSP planned to commission a 1.5mtpa plate mill and DRI unit by March 2012.
As most of the clearances for its captive mine at Angul (Utkal B1) are in place, JSP
expects to start production in six months.
First unit of 600MW Tamnar II project to be commissioned by October 2013
Jindal power's expansion at Tamnar, where JSP is setting up a 2,400MW power
project, is still on hold. JSP has received environment clearance for the project
subject to the coal tie up/linkage, but it has yet to receive consent to establish.
For first phase of the 1,200MW, JSP has received coal linkages. For the next phase
of 1200MW, the coal will be sourced from Jindal Steel, Mozambique.
The company expects to receive final environment clearance and consent to establish
for the first phase by October 2011. It has spent ~INR16b on the project and the
first unit of 600MW is expected to be commissioned in 24 months from the date of
receipt of the consent to establish.
Play on rich resources
JSP recently received a mining lease for four coking coal mines in Queensland,
Australia for which it had applied about two year ago. Initial drilling has begun.
JSP has also acquired 27.3% stake in Rockland Richfield, which has ~700mt of
coking coal reserves. JSP made an open offer for further purchase of stake and
increased control in the company (valuing it at USD88m).
The first shipment of iron ore from Bolivia is expected in a few weeks. The company
expects 0.5m ton of volumes in FY12 with net margins of USD50/ton at current iron
ore prices.
Commissioning of DRI project, Angul coal mine near-term triggers; Buy
The earnings growth in FY12 will be subdued due to delay in ramping up of captive
power plants. The merchant power rates in forward market have started improving,
which will boost the earnings in FY13.
We remain positive on the stock due to its rich portfolio of coal and iron ore resources.
JSP has been able to deliver superior earnings growth through judicious capital
allocation in high margin businesses. Maintain Buy.
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