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Jindal Saw’s (JSAW) Q2FY12 revenues at INR14.5bn were higher than the
estimated INR12.4bn due to a surge in sales volume at 241 KT (estimated
201 KT), largely sale of built‐up inventories in Q1FY12. However, EBITDA
margin at INR7,313/MT (the lowest in the last 15 quarters) was lower
than the estimated INR9,193/mt. During Q2FY12, JSAW executed 35‐40KT
of HSAW GAIL order which reported an operational loss of ~3%
(~INR1250/mt). Forex losses of INR483mn led to a lower PAT of
INR537mn vs the expected INR853mn. We have cut our FY12E/FY13E EPS
to INR12.2/16.8 from INR16.3/20.4 respectively to incorporate lower
sales volume and EBITDA margin. Maintain BUY with a new TP of INR238.
Pipes EBITDA lower at 7,313/MT, sales higher at 241 KT
High inventory carried over from Q1FY12 helped Q2FY12 sales volume surge to 241 KT (up
30.2% QoQ and 78.2% YoY), leading to revenues of INR14.5bn (+27.7% QoQ, +81.0% YoY).
The negative operational margin from the GAIL order led to lower blended SAW margin at
USD118/mt (in spite of LSAW reporting robust EBITDA margin of USD197/mt). The pending
GAIL order of 12‐14 KT has been executed in the first week of November 2011. DI margin at
USD131/mt was down 23.4% QoQ and 49.2% YoY due to higher coal prices
PAT hit by forex losses, order book at USD 490 KT
JSAW’s reported interest expenses at INR188mn were lower due to utilization of packing
and buyers credit. However, forex losses of INR483mn (INR300mn towards ECB loan and
the balance in trading loss) further dented PAT to INR537mn against our expectation of
INR853mn. Reported order book of USD665mn or 490 KT of pipes was down QoQ
(USD800mn or 665 KT as on Q1FY12) as there were no major orders reported during
Q2FY12. Order book break‐up: LSAW 100 KT, HSAW 200 KT, DI 150 KT and Seamless 40 KT.
Outlook and valuations: Awaiting start of iron ore mine; ‘BUY’
JSAW’s depleting order book and weak EBITDA margin have led us to cut FY12/FY13E EPS
by 25.2%/17.9% respectively. We also trim our target price by INR19/share (‐7.4%) to
INR238/share. Earnings growth will be driven by the start of iron‐ore mines which the
management expects to start in Q4FY12. We maintain ‘BUY/Sector Outperformer’ rating
on the stock. At INR136, JSAW trades at 11.2x and 8.1x our FY12 and FY13 EPS estimates
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Jindal Saw’s (JSAW) Q2FY12 revenues at INR14.5bn were higher than the
estimated INR12.4bn due to a surge in sales volume at 241 KT (estimated
201 KT), largely sale of built‐up inventories in Q1FY12. However, EBITDA
margin at INR7,313/MT (the lowest in the last 15 quarters) was lower
than the estimated INR9,193/mt. During Q2FY12, JSAW executed 35‐40KT
of HSAW GAIL order which reported an operational loss of ~3%
(~INR1250/mt). Forex losses of INR483mn led to a lower PAT of
INR537mn vs the expected INR853mn. We have cut our FY12E/FY13E EPS
to INR12.2/16.8 from INR16.3/20.4 respectively to incorporate lower
sales volume and EBITDA margin. Maintain BUY with a new TP of INR238.
Pipes EBITDA lower at 7,313/MT, sales higher at 241 KT
High inventory carried over from Q1FY12 helped Q2FY12 sales volume surge to 241 KT (up
30.2% QoQ and 78.2% YoY), leading to revenues of INR14.5bn (+27.7% QoQ, +81.0% YoY).
The negative operational margin from the GAIL order led to lower blended SAW margin at
USD118/mt (in spite of LSAW reporting robust EBITDA margin of USD197/mt). The pending
GAIL order of 12‐14 KT has been executed in the first week of November 2011. DI margin at
USD131/mt was down 23.4% QoQ and 49.2% YoY due to higher coal prices
PAT hit by forex losses, order book at USD 490 KT
JSAW’s reported interest expenses at INR188mn were lower due to utilization of packing
and buyers credit. However, forex losses of INR483mn (INR300mn towards ECB loan and
the balance in trading loss) further dented PAT to INR537mn against our expectation of
INR853mn. Reported order book of USD665mn or 490 KT of pipes was down QoQ
(USD800mn or 665 KT as on Q1FY12) as there were no major orders reported during
Q2FY12. Order book break‐up: LSAW 100 KT, HSAW 200 KT, DI 150 KT and Seamless 40 KT.
Outlook and valuations: Awaiting start of iron ore mine; ‘BUY’
JSAW’s depleting order book and weak EBITDA margin have led us to cut FY12/FY13E EPS
by 25.2%/17.9% respectively. We also trim our target price by INR19/share (‐7.4%) to
INR238/share. Earnings growth will be driven by the start of iron‐ore mines which the
management expects to start in Q4FY12. We maintain ‘BUY/Sector Outperformer’ rating
on the stock. At INR136, JSAW trades at 11.2x and 8.1x our FY12 and FY13 EPS estimates
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