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Strong beat in operating performance; reiterate Buy (CL)
News
Jindal Steel and Power (JSPL) reported consolidated 2QFY12 adj. net
income of Rs 9,482mn (+6% yoy, +2% qoq), 6% and 5% above our
expectations and BBG consensus. Excluded in the adj. net income is a one
time exceptional charge of Rs741mn relating to the writing off of overseas
mining and exploration activities (in Congo).
The company reported consolidated net sales of Rs44bn (+43% yoy, +12%
qoq), 9% above our estimates. EBITDA was Rs16.8bn (+13% yoy, -4%qoq),
7% above our expectations, mainly on the back of robust steel EBITDA. On
a standalone basis, the company reported adjusted net income of Rs5.0bn
(up 6% yoy and 7% qoq), while EBITDA came in at Rs 10.7bn (up 26% yoy
and 11% qoq), 3% ahead of our estimates. The power subsidiary, Jindal
Power Limited (JPL), reported top line of Rs7.38bn (11% above our
estimates) on the back of higher-than-expected PLF (generation of 2.0bn
kwh) and better-than-expected average tariffs of Rs3.9/kwh (vs GSe of
Rs3.7/kwh). Consequently, JPL reported net income of Rs4.1bn mn (vs
GSe: Rs3.9bn). Other expenses at JSPL were up 81% yoy and up 37% qoq.
We believe that this includes MTM losses on FX debt outstanding (we will
seek clarity on this in tomorrow’s earnings call). Adjusted for this, we
believe the operating performance beat would be even more significant.
Analysis
The significant beat seems largely on the top line (higher than expected
sales volumes) in both steel and power. Steel sales volumes increased 31%
qoq to 598 kT (16% higher than our estimate of 502kT). Average steel
realizations increased 12% qoq to 53,400 Rs/tonne.
Implications
We reiterate Buy (on CL) on JSPL for its earnings resilience, strong growth
trajectory and attractive valuations, and maintain our target price.
INVESTMENT LIST MEMBERSHIP
Asia Pacific Buy List
Asia Pacific Conviction Buy List
Coverage View: Neutral
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Strong beat in operating performance; reiterate Buy (CL)
News
Jindal Steel and Power (JSPL) reported consolidated 2QFY12 adj. net
income of Rs 9,482mn (+6% yoy, +2% qoq), 6% and 5% above our
expectations and BBG consensus. Excluded in the adj. net income is a one
time exceptional charge of Rs741mn relating to the writing off of overseas
mining and exploration activities (in Congo).
The company reported consolidated net sales of Rs44bn (+43% yoy, +12%
qoq), 9% above our estimates. EBITDA was Rs16.8bn (+13% yoy, -4%qoq),
7% above our expectations, mainly on the back of robust steel EBITDA. On
a standalone basis, the company reported adjusted net income of Rs5.0bn
(up 6% yoy and 7% qoq), while EBITDA came in at Rs 10.7bn (up 26% yoy
and 11% qoq), 3% ahead of our estimates. The power subsidiary, Jindal
Power Limited (JPL), reported top line of Rs7.38bn (11% above our
estimates) on the back of higher-than-expected PLF (generation of 2.0bn
kwh) and better-than-expected average tariffs of Rs3.9/kwh (vs GSe of
Rs3.7/kwh). Consequently, JPL reported net income of Rs4.1bn mn (vs
GSe: Rs3.9bn). Other expenses at JSPL were up 81% yoy and up 37% qoq.
We believe that this includes MTM losses on FX debt outstanding (we will
seek clarity on this in tomorrow’s earnings call). Adjusted for this, we
believe the operating performance beat would be even more significant.
Analysis
The significant beat seems largely on the top line (higher than expected
sales volumes) in both steel and power. Steel sales volumes increased 31%
qoq to 598 kT (16% higher than our estimate of 502kT). Average steel
realizations increased 12% qoq to 53,400 Rs/tonne.
Implications
We reiterate Buy (on CL) on JSPL for its earnings resilience, strong growth
trajectory and attractive valuations, and maintain our target price.
INVESTMENT LIST MEMBERSHIP
Asia Pacific Buy List
Asia Pacific Conviction Buy List
Coverage View: Neutral
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