Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Q3FY12 – Net sales growth driven by strong volumes; however iron ore
availability remains to be a challenge
• JSW steel’s net sales for Q3FY12 stood at `78,765 mn; showing a growth of 35.6% on Y-o-Y basis
and a moderate growth of 3.2% sequentially. This was mainly on account of increase in volume
(Crude steel production) which rose by 19% on Y-o-Y to 1.9 mn MT.
• Cost of production rose by 37.8% Y-o-Y, mainly on account of higher iron ore costs, as the iron
ore was sourced through e-auction route resulting in raw material cost increasing by 38.5% on
Y-o-Y. Company keeps a stock of 1.5 months; accordingly we may see the benefit of the recent
fall in international iron ore prices to accrue to the company in the coming quarters as the eauction price might be re-adjusted downwards.
• As a result of the more than proportionate increase in total cost of production vs net sales,
EBITDA margin declined by 132bps on Y-o-Y to 15.9% in Q3FY12 vs 17.2% in Q3FY11 and a
decline of 20bps on a Q-o-Q basis.
• PAT for the Q3FY12 stood at `1,682 mn; showing a de-growth of 56% Y-o-Y, however on
Q-o-Q basis the same has shown an increase of 32.3% mainly on account of tax write-back of
`1,813 mn in Q3FY12.
Result Highlights
Strong volume growth on all segments of steel help steel unit exhibit a strong growth
Revenue from steel division was up 38.8% Y-o-Y mainly driven by sharp increase in volume (total
saleable steel rose by 20% to 1.91 mn MT). Rolled long products rose by 31% to 0.36 mn MT, Rolled
flat rose by 16% to 1.4 mn MT and Semis rose to 0.1 mn MT showing a growth of 36% on Y-o-Y basis.
However EBIT margins declined as a result of increase in cost of inputs especially iron ore.
Valuation & Viewpoint
At current market price the stock is trading at 5.08x FY13E and 4.9x FY14E EV/EBIDTA of its
consensus estimates respectively. Currently out of the 119 mines only 19 mines have a clear record
in ban affected region of Karnataka. Hence JSW being the largest steel producer in that region
there exists an opportunity for the company. However, given the problems of iron ore availability
in the key markets of JSW Steel, we remain cautious on the stock. Decision of SC which is due on
27
th
Jan’12 with regards to mining ban in Karnataka, would be crucial for the company
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Q3FY12 – Net sales growth driven by strong volumes; however iron ore
availability remains to be a challenge
• JSW steel’s net sales for Q3FY12 stood at `78,765 mn; showing a growth of 35.6% on Y-o-Y basis
and a moderate growth of 3.2% sequentially. This was mainly on account of increase in volume
(Crude steel production) which rose by 19% on Y-o-Y to 1.9 mn MT.
• Cost of production rose by 37.8% Y-o-Y, mainly on account of higher iron ore costs, as the iron
ore was sourced through e-auction route resulting in raw material cost increasing by 38.5% on
Y-o-Y. Company keeps a stock of 1.5 months; accordingly we may see the benefit of the recent
fall in international iron ore prices to accrue to the company in the coming quarters as the eauction price might be re-adjusted downwards.
• As a result of the more than proportionate increase in total cost of production vs net sales,
EBITDA margin declined by 132bps on Y-o-Y to 15.9% in Q3FY12 vs 17.2% in Q3FY11 and a
decline of 20bps on a Q-o-Q basis.
• PAT for the Q3FY12 stood at `1,682 mn; showing a de-growth of 56% Y-o-Y, however on
Q-o-Q basis the same has shown an increase of 32.3% mainly on account of tax write-back of
`1,813 mn in Q3FY12.
Result Highlights
Strong volume growth on all segments of steel help steel unit exhibit a strong growth
Revenue from steel division was up 38.8% Y-o-Y mainly driven by sharp increase in volume (total
saleable steel rose by 20% to 1.91 mn MT). Rolled long products rose by 31% to 0.36 mn MT, Rolled
flat rose by 16% to 1.4 mn MT and Semis rose to 0.1 mn MT showing a growth of 36% on Y-o-Y basis.
However EBIT margins declined as a result of increase in cost of inputs especially iron ore.
Valuation & Viewpoint
At current market price the stock is trading at 5.08x FY13E and 4.9x FY14E EV/EBIDTA of its
consensus estimates respectively. Currently out of the 119 mines only 19 mines have a clear record
in ban affected region of Karnataka. Hence JSW being the largest steel producer in that region
there exists an opportunity for the company. However, given the problems of iron ore availability
in the key markets of JSW Steel, we remain cautious on the stock. Decision of SC which is due on
27
th
Jan’12 with regards to mining ban in Karnataka, would be crucial for the company
No comments:
Post a Comment