Jindal Steel & Power - Uncertainties Ahead; Result Update Q3FY15 ::Edelweiss, report

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Jindal Steel & Power Ltd. (JSPL) | Q3FY15 Result Update | In line estimates, Lower revenue from Iron & Steel business was offset by strong revenue from power business; maintain HOLD rating on the stock with target price of Rs. 201 :: IndiaNivesh

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Jindal Steel and Power: A cautious tread to mine auctions :: Kotak Sec, report

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A cautious tread to mine auctions. Jindal Steel and Power will be selective in bidding for coal mines with its strategy focused on acquiring meaningful reserves with easy access and adequate infrastructure to ensure value maximization over the life of assets. As such, it has bid for only 2 mines for the steel business in the first tranche of auctions. While bids for steel may see aggressive participation, JSP has the advantage of wining coal blocks for its power business. The outcome is uncertain and can vary significantly. We cut our EBITDA estimate by 2-7% for FY2015-17 to factor in a decline in steel prices. Maintain REDUCE with an unchanged TP of ` 160.

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Jindal Steel and Power: Steel improves despite challenging markets ::Kotak Sec, report

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Steel improves despite challenging markets. Jindal Steel and Power’s consolidated EBITDA (`15.6 bn, down 9% yoy and 5% qoq) was 5% lower than our estimate due to lower generation/realization at Jindal Power. Steel EBITDA increased sequentially, despite raw material cost increases and challenging market conditions, and may include one-offs. JSP had a net loss of `16.2 bn after accounting for additional coal levy, though it is yet to account fully for the entire payment of `30.9 bn (as levy). We will review our estimates after the conference call.

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The government starts the e-auction process for coal blocks for 24 blocks: IndiaNivesh

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Jindal Steel & Power Ltd.|Q2FY15 First Cut Analysis | In line estimates, Lower revenue from Iron & Steel business was offset by strong revenue from power business :: IndiaNivesh

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Jindal Steel and Power : Tepid 1QFY14; Buy-Back Looks the Right Thing to Do :: Citi Research

Jindal Steel and Power (JNSP.BO)
Alert: Tepid 1QFY14; Buy-Back Looks the Right Thing to Do
 To consider buy-back - JSPL’s board of directors has constituted a sub-committee
to consider the buy-back of shares and seek relevant approvals from lenders.
 Buy-back makes sense in our view - JSPL’s stock has corrected sharply due to
controversies related to captive coal, iron ore, concerns on new SBD and a decline
in steel/power realizations. The stock is now below FY13A book value of Rs226 and
replacement cost of assets of Rs258/share. Despite muted performance in FY13,
JSPL still generated RoE of 18% (adjusting for one-offs) and 15% on reported PAT
basis with operating cash flow of ~US$840mn. In such a situation, we believe
buying back the stock is a sensible step for long-term shareholder value creation.
 1QFY14 recurring PAT was 13% below estimate – 1QFY14 consolidated
recurring PAT at Rs6.5bn was below Citi’s estimate of Rs7.5bn. The miss was
mainly due to lower profitability of overseas operations. 1QFY14 Oman EBITDA at
US$15mn was below expectations. The South African mines had lower profits due
to a decline in coal prices. Further, the Mozambique mines had initial high start-up
costs. However, 1QFY14 reported PAT (including MTM on forex loans) at Rs4.9bn
was ahead of Citi at Rs4.2bn.
 Jindal Power’s realizations remain flat QoQ – JPL’s blended realizations at
Rs3.25/kwh were flat QoQ. PLF at 100% was high and generation increased 2%
QoQ. JPL PAT at Rs3.2bn was 9% ahead of Citi at Rs2.9bn.
 Steel sales remain strong – Blended steel realizations rose ~5-6% QoQ as
discounts were reduced. Realizations have fallen more than 10% vs last year. Sales
volume rose 18% YoY to 665kt; this compares to flat YoY demand for the country as
a whole. JSPL has increased its focus on exports – export volumes rose 220% YoY
and exports are now ~18-20% of the Indian steel business sales.

Jindal Steel & Power - The unthinkable now obvious: 5x Debt/EBITDA by FY14—end ::Credit Suisse

● JSPL’s consolidated net debt increased from Rs224 bn at endFY13 to Rs250 bn in 1Q. This was despite only Rs12 bn of the
Rs90 bn planned capex for FY14 getting spent in 1Q. JSPL
estimates end-FY14 debt at Rs300 bn, a level we had anticipated
for end-FY15. By FY14 end, JSPL will thus be 5x Debt/EBITDA.
● CPP disappointments continue, with JSPL for the first time stating
that power sales from Angul (810MW) were unviable without
captive coal. With contingency plans on for the DRI unit (i.e. no
Utkal B1), utilisations are likely to stay low for a while. Raigarh
technical and evacuation challenges continue.
● Tamnar I realisations may remain suppressed for longer than
earlier estimated, and Tamnar II utilisations may remain low for
several years. The 400MW 15-year PPA with TN SEB (we believe
at Rs4.7/kwh) is encouraging, but utilisation is the problem.
● As we cut our estimates for CPP, steel business and Tamnar II, our
FY14/15 EPS falls by 20%/6%, and target price reduces to Rs218/sh
(Figure 1). Maintain NEUTRAL. The buyback (details to be clear post
lender approvals) is likely to provide some support to the stock.

Jindal Steel & Power Weak 1Q: Steel business weakness and CPP utilisation challenges are headwinds ::Credit Suisse

● Consolidated sales missed our estimates by 10%. Two-thirds of
the miss came from lower steel and power sales volumes in the
standalone business. A 20-day shutdown at CPP units and higher
captive demand led to lower power sales from captive units.
● A third of the sales miss came from lower volumes at the Shadeed
plant in Oman. The 1,000 MW power unit performed at 100%
utilisation in the quarter. However, power realisations continued to
be subdued with likely selling through exchanges.
● Material costs were lower due to lower steel volumes. EBITDA
missed by 11% as lower material costs were offset by a Rs 2bn
MTM forex loss booked in 1Q14. Steel EBITDA/t at $209
improved sharply QoQ (4Q13: $138) when discounted sales were
used to push inventory. The South African coal business seems to
have reversed the EBIDTA losses from 4Q13.
● A company share buyback now seems inevitable. A sub-committee
of Board of Directors has been authorised to evaluate such a buyback

Sizzling Stocks :: Business Line

Technicals- TCS, L and T, Jindal Steel, Vascon Engineers, Wendt, Tide Water Oil, :: Business Line

Jindal Steel and Power: Steel Realizations Weak; Inventory Liquidation ::Citi Research

Jindal Steel and Power (JNSP.BO)
Alert: Steel Realizations Weak; Inventory Liquidation
 4QFY13 PAT 25% below estimates – JSPL’s 4QFY13 consolidated PAT at
Rs7.6bn fell 20% QoQ / 35% YoY and was 25% below Citi (Rs9.9bn). The miss in
PAT was mainly due to (1) sharp decline in blended steel realizations which fell 7%
QoQ / 12% YoY (9% below Citi) due to inventory liquidation in the quarter; (2) higher
opex, depreciation and interest due to the commissioning of the plate mill at Angul
(low capacity utilization as DRI has not been commissioned).
 Steel realizations have already inched up in April – Steel realizations have
already inched up 3-4% in April13 as JSPL has taken price hikes. Our channel
checks suggest that the prices have also improved for other players in the industry.
 Strong steel volumes in 4QFY13 – Steel sales volume at 909k tons was at a
historical high; up 24% QoQ / 19% YoY. Steel and pellet production was more or
less in-line. Due to strong sales, inventory levels at the end of FY13 are flat yoy.
 Jindal Power’s realizations remain depressed – JPL’s 4QFY13 generation
rebounded strongly and PLF at 99.5% was healthy. However the blended
realizations at Rs3.25/ kwh (assuming 9% aux. consumption) fell 5% QoQ; below
Citi est. at Rs3.43/kwh.
 Overseas operations ramping up well – JSPL has started production of coking
coal at its captive mines in Mozambique. 0.5mt of coking coal is expected to be
delivered to India operations in FY14. HBI Production at Oman has increased 23%
YoY to 1.52mtpa.
 A number of projects set to commission over next 6-9 months – Angul project
(1.6mtpa) will start by Sep13. Unit 1 (600MW) of Tamnar 2 (2400MW) will be
commissioned by July-Sep13 and 3 units of Tamnar 2 (1800MW) will come online
by Mar14. The second 4.5mtpa pellet plant will commissioned by Dec13. 2mtpa
steel rolling mill at Oman will also be commissioned by Dec13.
 Utkal-B1 mining lease remains an overhang – The Utkal-B1 mining lease still
remains to be signed; this remains a key overhang on the stock. However JSPL has
already built coal inventory of ~600k tons at Angul and this is likely to go up to ~1mt.
This coal inventory should be sufficient to run the project till June14.

Jindal Steel and Power: Regulatory risks weigh in ::Kotak Sec

Jindal Steel and Power: Regulatory risks weigh in
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily03102012ll.pdf

Jindal Steel & Power: Regulatory Overhang + Single-Digit RoIC = De-rating; Sell:: Nirmal Bang

Regulatory Overhang + Single-Digit RoIC = De-rating; Sell We assign a Sell rating to Jindal Steel & Power (JSPL) because of regulatory overhang, which will lead to a sharp deterioration in incremental return ratios. In the past five years, JSPL has grown multi-fold on the back of captive resources, but future expansion depends on merchant raw material supply. Besides this, JSPL is apparently one of the few companies which have benefited from captive coal mine allocation, which along with the company’s large size, makes it more vulnerable to regulatory actions like ceiling on merchant power price or demand for free power (as witnessed in Orissa). We expect RoE and RoCE to decline from 21.9% and 12.2% in FY12 to 15.3% and 9.1% in FY14E, respectively, while RoIC over FY10-14E is likely to be just 3.9%. We have set a TP of Rs300 on JSPL

Annual Report Analysis - Jindal Steel and Power:: EDEL

Jindal Steel and Power’s (JSPL) FY12 annual report analysis highlights improvement in cash flow from operations, but for short-term loans and advances which comprise ~14% of FY12 net worth (includes loans to promoter group entities). MTM forex loss was INR3.7bn (7% of FY12 PBT), of which INR3.3bn was capitalised under amended AS-11.  Impairment of investments impacts profitability.

Jindal Steel & Power - CIC acquisition: No near-term benefit ::Edelweiss, PDF link

Jindal Steel & Power (JSPL) today announced completion of acquisition of CIC Energy (CIC) for USD115mn (consideration already agreed to in July 2012). CIC provides JSPL access to 2.4bn tonnes of coal resource in Botswana. However, due to lack of logistics linkages, exploitation of this resource can only be via the 300MW power plant to be developed in three years. The development of required railway line has not commenced yet and hence we have no visibility on merchant mining. Retain estimates and maintain ‘BUY’ with target price of INR508.

Jindal Steel and Power - Facing multiple challenges; lower PO 􀂄 BofA Merrill Lynch,

Jindal Steel and Power Limited
Facing multiple challenges;
lower PO
􀂄 Cut estimates, PO on multiple challenges; Underperform
We cut our FY13-14E EPS 3-9% and PO to Rs428 due to (1) potential delays in
key growth projects; (2) lower margin outlook at the Tamnar II project; & (3) lower
captive power valuation. We expect EPS growth to be muted over FY12-14E.
While downside appear limited post recent correction based on our base case
valuation, we maintain our Underperform rating as risk reward still appears
skewed to the downside, as upside catalysts are limited & further delays in mining
lease approval & adverse policy changes could dent valuation further.

Jindal Steel & Power - Growth ahead; visit note; Buy :: Edelweiss PDF link

Jindal Steel & Power (JSP IN, INR 437, Buy)

Jindal Steel & Power (JSPL) expects the Orissa government to revise favorably the free power supply clause from captive coal fuelled CPP’s from 33% to 13%. This should create ground for start of UtkalB1 coal mine operations by end FY13. We estimate the mine’s DCF valuation at INR51/share. Phase-II of Angul steel plant (5.5mtpa capacity) is ready for launch and part of the iron ore requirement is secured. While benefits of this expansion will be back-ended, JSPL’s consolidated D:E of 1.0 will comfortably absorb the increased debt in the interim. We retain estimates and maintain ‘BUY’with a target price of INR648.

Jindal Steel & Power - Positive outlook; company update; BUY: Edelweiss, PDF link

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Jindal Steel & Power (JSP IN, INR 487, Buy)

Jindal Steel & Power’s (JSPL) steel business performed strongly in Q4FY12, led by sharp jump in both steel and pellet sales volumes. The segment is likely to remain robust owing to firm steel prices, weak coking coal cost and completion of Angul DRI project in March 2013. JSPL intends to start its first unit in the 2,400 MW power project one year ahead of its original schedule. We are positive on JSPL on the back of growth in both steel and power businesses and its portfolio of resource assets. We maintain ‘BUY’ with TP of INR648.

Jindal Steel & Power -Expensive valuations drive the downgrade : Prabhudas Lilladher

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􀂄 Fuel security assured for 2400MW with PMOs recent directives on FSAs: The
new FSAs will assure coal availability for a period of 20 (earlier 5) years at 80%
(earlier 50%) of the requirement. The enhanced domestic coal availability would
marginalize Jindal Power’s dependence on supplies expected from captive mines
in Mozambique and Indonesia for its upcoming 2400MW power plant (expected
during H2FY14) in Chhattisgarh with all-round profitability improvement.
􀂄 Mining lease for Utkal B1 coal mine struck: Grant of mining lease for Utkal B-1
coal mine (capacity of 6mtpa) is struck due to Govt. of Odisha’s demand for 33%
of the power generated from washery rejects at free of cost. Otherwise, the
company has secured all other clearances and also acquired ~75% of the
required land. The mine would feed steel plant’s entire coal requirement, while
would meet 50% of power plant’s requirement. Hence, the activity on the coal
mine would stand as the most crucial milestone for profitability of JSPL’s
810MW (135MWX6) and 1.6mtpa steel plant at Angul, Odisha. We expect 1.5m
tonnes of coal production from these mines in FY14.
􀂄 Production from overseas coal assets still far away: On the backdrop of average
quality of Indonesian coal mines, increased regulatory intervention and logistics
bottlenecks in Mozambique, we don’t expect any meaningful contribution from
overseas coal assets in the next couple of years.
􀂄 Downgrade to Reduce with TP of Rs625: Given the sharp run-up in the stock
price and expensive valuations, we downgrade our rating on the stock from
‘BUY’ to ‘Reduce’ with TP of Rs625. However, we continue to like JSPL’s strong
structural play on resources and attractive returns profile.