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Result Review
JSW Steel
JSW Steel reported robust set of numbers for 4QFY2011. JSW Steel’s consolidated net
sales increased by 32.5% yoy to `7,209cr in 4QFY2011, above our estimate of `6,375cr
on account of higher-than-expected rise in realisations. The company’s saleable steel stood
at 1.65mn tonnes (+14% yoy) during the quarter. EBITDA increased by 25.8% yoy to
`1,662cr; however, EBITDA margin declined by 127bp yoy to 23.1%. Interest expenses
declined by 12.9% yoy to `217cr. As a result, net profit increased by 45.2% yoy to `794cr.
Prices of iron ore continue to remain firm, while coking coal price contracts for 1QFY2012
have been signed at US$ 330/tonne (+46.7% qoq) by steelmakers. Nevertheless, we
believe the decline in the stock price over the last four months has discounted these
concerns. Further, we believe JSW Steel is well placed to capitalise on strong domestic
demand on the back of its expanded capacity, improving product mix, commissioning of
beneficiation plant to lower iron ore cost and recovery in its US operations. Hence, we
maintain our Buy recommendation on the stock. Our target price is under review.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Result Review
JSW Steel
JSW Steel reported robust set of numbers for 4QFY2011. JSW Steel’s consolidated net
sales increased by 32.5% yoy to `7,209cr in 4QFY2011, above our estimate of `6,375cr
on account of higher-than-expected rise in realisations. The company’s saleable steel stood
at 1.65mn tonnes (+14% yoy) during the quarter. EBITDA increased by 25.8% yoy to
`1,662cr; however, EBITDA margin declined by 127bp yoy to 23.1%. Interest expenses
declined by 12.9% yoy to `217cr. As a result, net profit increased by 45.2% yoy to `794cr.
Prices of iron ore continue to remain firm, while coking coal price contracts for 1QFY2012
have been signed at US$ 330/tonne (+46.7% qoq) by steelmakers. Nevertheless, we
believe the decline in the stock price over the last four months has discounted these
concerns. Further, we believe JSW Steel is well placed to capitalise on strong domestic
demand on the back of its expanded capacity, improving product mix, commissioning of
beneficiation plant to lower iron ore cost and recovery in its US operations. Hence, we
maintain our Buy recommendation on the stock. Our target price is under review.
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