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● JSPL’s results were strong across divisions. It is showing good
execution and smart tactical steps to maximise profits. Net sales
and EBITDA beat estimates by 20% and 18%, respectively.
● Steel: Pellet sales grew 50% QoQ, thriving on the undersupplied
market for lump ore/pellets: JSPL expects this to continue for 2–3
years. Further, by using HBI from Shadeed rather than internal
sponge iron and also inventory liquidation, finished steel volumes
increased 30% YoY. Ex one-offs, EBITDA/T for division was $410/t.
● Power: Despite 2Q usually being weak (seasonal), PLF was 93%
(CS 85%). Chhattisgarh CPP units are at 50% PLF (below
expectations), but Angul unit is at 90%+. JSP still expects full
1,350 MW commissioning by FY12—a must to retain tax benefits.
● Commissioning timelines: Angul plate mill—Mar-12; SMS + DRI—
Sep-12; coal mine—Apr-12; Tamnar 2—Sep-13. Overseas
operations: Indonesia mining—Apr-12. South Africa is making
profits and expects to mine 1 mnt. Shadeed is running at 1.2
mnpta run-rate.
● Overall, the basket of operations continues to deliver well. We
maintain out target price of Rs635 and OUTPERFORM rating.
Strong results; strength across divisions
JSPL’s results were strong across divisions. The company is showing
good execution and smart tactical steps to maximise profits. Net sales
and EBITDA beat our estimates by 20% and 18%, respectively. The
Rs1.7 bn of exceptional expenditure was due to: (1) Rs1 bn non-cash
forex loss and (2) Rs700 mn of write-off taken for Congo assets.
● Steel: Pellet sales grew 50% QoQ, thriving on the undersupplied
pellet market. It expects to sell 70% of the production externally.
By using HBI from Shadeed rather than internal sponge iron,
finished steel volumes rose 30% YoY. Ex one-offs, EBITDA/T for
the division was $410/t. High inventory liquidation helped 2Q.
● Power: Despite 2Q being the weakest seasonally, PLF was 93%
(vs CS est of 85%). Merchant sales price was Rs3.76/unit. Rs800
mn of other income added to profits, beating our estimates by 8%.
Key takeaways from conference call
● 1350 MW: Raigarh units still running on low PLF; Angul unit has
achieved 90%+. Balance units to be commissioned by FY12 end.
Recall that to retain tax benefits it must meet this target.
● Steel Orissa timelines: Plate Mill—Mar-12; SMS + DRI—Sep-12.
Coal mine to start by Apr-12 (delayed, vs earlier Dec-11 guideline).
● Bolivia: Marginal sales have started, and should pick up post Dec-
11 when the river has adequate water for transportation.
● Indonesia: Mining should start in April-12 (delayed); 0.5 mnt–1
mnt is expected in FY13.
● South Africa: Sales have started; GCV is 6,300 kcal/kg. Target
production is 1 mnt; 2Q12 profit was $5 mn.
● Shadeed: Running at 1.2 mntpa; $30-35 mn profit expected in FY12.
● 2400 MW: Still awaiting clearance; expect Unit-1 by Sep-13.
Overall, the basket of operations continues to deliver well. We
maintain our target price of Rs635 and OUTPERFORM rating.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
● JSPL’s results were strong across divisions. It is showing good
execution and smart tactical steps to maximise profits. Net sales
and EBITDA beat estimates by 20% and 18%, respectively.
● Steel: Pellet sales grew 50% QoQ, thriving on the undersupplied
market for lump ore/pellets: JSPL expects this to continue for 2–3
years. Further, by using HBI from Shadeed rather than internal
sponge iron and also inventory liquidation, finished steel volumes
increased 30% YoY. Ex one-offs, EBITDA/T for division was $410/t.
● Power: Despite 2Q usually being weak (seasonal), PLF was 93%
(CS 85%). Chhattisgarh CPP units are at 50% PLF (below
expectations), but Angul unit is at 90%+. JSP still expects full
1,350 MW commissioning by FY12—a must to retain tax benefits.
● Commissioning timelines: Angul plate mill—Mar-12; SMS + DRI—
Sep-12; coal mine—Apr-12; Tamnar 2—Sep-13. Overseas
operations: Indonesia mining—Apr-12. South Africa is making
profits and expects to mine 1 mnt. Shadeed is running at 1.2
mnpta run-rate.
● Overall, the basket of operations continues to deliver well. We
maintain out target price of Rs635 and OUTPERFORM rating.
Strong results; strength across divisions
JSPL’s results were strong across divisions. The company is showing
good execution and smart tactical steps to maximise profits. Net sales
and EBITDA beat our estimates by 20% and 18%, respectively. The
Rs1.7 bn of exceptional expenditure was due to: (1) Rs1 bn non-cash
forex loss and (2) Rs700 mn of write-off taken for Congo assets.
● Steel: Pellet sales grew 50% QoQ, thriving on the undersupplied
pellet market. It expects to sell 70% of the production externally.
By using HBI from Shadeed rather than internal sponge iron,
finished steel volumes rose 30% YoY. Ex one-offs, EBITDA/T for
the division was $410/t. High inventory liquidation helped 2Q.
● Power: Despite 2Q being the weakest seasonally, PLF was 93%
(vs CS est of 85%). Merchant sales price was Rs3.76/unit. Rs800
mn of other income added to profits, beating our estimates by 8%.
Key takeaways from conference call
● 1350 MW: Raigarh units still running on low PLF; Angul unit has
achieved 90%+. Balance units to be commissioned by FY12 end.
Recall that to retain tax benefits it must meet this target.
● Steel Orissa timelines: Plate Mill—Mar-12; SMS + DRI—Sep-12.
Coal mine to start by Apr-12 (delayed, vs earlier Dec-11 guideline).
● Bolivia: Marginal sales have started, and should pick up post Dec-
11 when the river has adequate water for transportation.
● Indonesia: Mining should start in April-12 (delayed); 0.5 mnt–1
mnt is expected in FY13.
● South Africa: Sales have started; GCV is 6,300 kcal/kg. Target
production is 1 mnt; 2Q12 profit was $5 mn.
● Shadeed: Running at 1.2 mntpa; $30-35 mn profit expected in FY12.
● 2400 MW: Still awaiting clearance; expect Unit-1 by Sep-13.
Overall, the basket of operations continues to deliver well. We
maintain our target price of Rs635 and OUTPERFORM rating.
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