Please Share:: 
Impact on JSPL- Downgraded our rating from Buy to HOLD with target price
of Rs. 201
Most affected company of this decision is Jindal Steel and Power as 4 coal
blocks were allocated to this company for its sponge iron plants and 1000
MW power plant. JSPL draws significant benefits from captive coal mines at
sponge iron production along with captive power plant (Raigarh) and its
1000MW (Tamnar1) merchant power plant of JPL (Jindal Power Ltd). For JSPL,
the SC ruling not only creates uncertainty on profitability from plant
(Raigarh)existing operational coal blocks (Gare Palma IV/I /2/3) but also on
the profitability of the US$2.6bn investment in the Angul Steel & Power project
as the associated Utkal B1 block is also de-allocated now.
Impact on standalone business (JSPL)
JSPL draws benefits from captive coal mines for its sponge iron production.
After de-allocation of coal block JSPL may have to pay Rs. 2000/t against its
current cost of Rs. 1300/ton difference of Rs.700/t on 6mt volumes. This would
mean EBITDA loss of Rs. 4.3 bn on standalone business. At 8xEV/EBITDA, this
will mean loss of equity value by Rs 35 bn.
Impact on Jindal Power Ltd (JPL)
JPL draws significant benefits from captive coal mines at its 1000MW
(Tamnar1) merchant power plant. Supply of coal for 1000 MW power plant is
sourced from its captive coal mines which are located in close proximity to
the power plant and which have geological reserves of approximately 246
million tons. The Gare Palma IV/2 and IV/3 mines have been leased to JPL for
30 years by the Ministry of Coal.
Further the company is expanding its power generation capacity by setting
up 2,400 MW (4 X 600 MW) power plant adjacent to its existing 1000 MW
Power Plant. Three units of 600 MW each have been completed.....
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
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Impact on JSPL- Downgraded our rating from Buy to HOLD with target price
of Rs. 201
Most affected company of this decision is Jindal Steel and Power as 4 coal
blocks were allocated to this company for its sponge iron plants and 1000
MW power plant. JSPL draws significant benefits from captive coal mines at
sponge iron production along with captive power plant (Raigarh) and its
1000MW (Tamnar1) merchant power plant of JPL (Jindal Power Ltd). For JSPL,
the SC ruling not only creates uncertainty on profitability from plant
(Raigarh)existing operational coal blocks (Gare Palma IV/I /2/3) but also on
the profitability of the US$2.6bn investment in the Angul Steel & Power project
as the associated Utkal B1 block is also de-allocated now.
Impact on standalone business (JSPL)
JSPL draws benefits from captive coal mines for its sponge iron production.
After de-allocation of coal block JSPL may have to pay Rs. 2000/t against its
current cost of Rs. 1300/ton difference of Rs.700/t on 6mt volumes. This would
mean EBITDA loss of Rs. 4.3 bn on standalone business. At 8xEV/EBITDA, this
will mean loss of equity value by Rs 35 bn.
Impact on Jindal Power Ltd (JPL)
JPL draws significant benefits from captive coal mines at its 1000MW
(Tamnar1) merchant power plant. Supply of coal for 1000 MW power plant is
sourced from its captive coal mines which are located in close proximity to
the power plant and which have geological reserves of approximately 246
million tons. The Gare Palma IV/2 and IV/3 mines have been leased to JPL for
30 years by the Ministry of Coal.
Further the company is expanding its power generation capacity by setting
up 2,400 MW (4 X 600 MW) power plant adjacent to its existing 1000 MW
Power Plant. Three units of 600 MW each have been completed.....
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
LINK
http://www.indianivesh.in/Admin/Upload/635472320502500000_NiveshDaily%20-%2025%20September%202014.pdf
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