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JSW Steel
JSW Steel reported better-than-expected standalone numbers for 2QFY2012.
Although JSW Steel’s crude steel production increased by 10.6% yoy to 1.7mn
tonnes, production was lower by at least 0.5mn tonnes on account of shortage of
iron ore. Despite lower production, standalone net sales grew by 33.5% yoy
to `7,625cr, in-line with our estimate of `7,607cr. Net sales growth was driven by
the increase in steel sales volumes (up 18.9% yoy to 1.9mn tonnes) as well as
blended realizations (up 14.6% yoy to `42,831/tonne). However, EBITDA/tonne
grew only by 9.9% yoy to `6,887 due to higher raw-material costs. EBITDA
increased by 30.6% yoy to `1,296cr. The company reported exceptional items
related to forex loss of `513cr during the quarter. Consequently, net profit
decreased by 71.5% yoy to `127cr. However, adjusted net profit, excluding
exceptional items, increased by 43.7% yoy to `640cr (higher than our estimate
of `432cr). The company has now lowered its production and sales volumes
estimates for FY2012 and FY2013 by 14.0% and 13.0% to 7.5mn tonnes and
7.8mn tonnes, respectively. We maintain our Buy rating on the stock; our target
price is under review.
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JSW Steel
JSW Steel reported better-than-expected standalone numbers for 2QFY2012.
Although JSW Steel’s crude steel production increased by 10.6% yoy to 1.7mn
tonnes, production was lower by at least 0.5mn tonnes on account of shortage of
iron ore. Despite lower production, standalone net sales grew by 33.5% yoy
to `7,625cr, in-line with our estimate of `7,607cr. Net sales growth was driven by
the increase in steel sales volumes (up 18.9% yoy to 1.9mn tonnes) as well as
blended realizations (up 14.6% yoy to `42,831/tonne). However, EBITDA/tonne
grew only by 9.9% yoy to `6,887 due to higher raw-material costs. EBITDA
increased by 30.6% yoy to `1,296cr. The company reported exceptional items
related to forex loss of `513cr during the quarter. Consequently, net profit
decreased by 71.5% yoy to `127cr. However, adjusted net profit, excluding
exceptional items, increased by 43.7% yoy to `640cr (higher than our estimate
of `432cr). The company has now lowered its production and sales volumes
estimates for FY2012 and FY2013 by 14.0% and 13.0% to 7.5mn tonnes and
7.8mn tonnes, respectively. We maintain our Buy rating on the stock; our target
price is under review.
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