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2QFY12 results
JSPL’s 2Q consolidated net profit at Rs8.9bn, flat YoY, was 6% below our
estimates. Pre-exceptional PBT for the standalone entity was 6% ahead of our
estimates due to strong steel and pellet volume growth. The reported net
profit was impacted by write-off of some overseas mining investments and
forex translation losses. Performance of Jindal Power was in line with our
estimates. JPSL is targeting to complete its steel expansions by Sep 2012 and
commission the balance captive units by March 2012. We are however cutting
earnings for FY12-13 by 3-5% to factor in higher costs and delays in projects.
Our SOTP based TP is now Rs545/sh and we maintain O-PF on the stock.
Standalone financials – pre-exceptional PBT ahead of estimates
JSPL’s standalone pre-exceptional PBT was 6% ahead of our estimates mainly due
to higher steel (up 29% YoY) and pellet sales (up 25x YoY on low base). The
reported net profit was however lower than our estimates due to forex loss of
Rs1bn and write off on investments in Congo mines to the tune of Rs1.47bn.
While the first captive unit of 135MW has stabilized at Angul, the two units at
Raigarh are still operating at ~50% PLF and incurring losses.
Jindal Power – 2Q performance in line
Jindal Power’s 2Q net profit at Rs4.1bn, down 11% YoY was in line with our
estimates. Power generation was up 3.6% YoY and the average PLF during the
quarter was 92.5%. The average merchant power realization was Rs3.75/kWh
during the quarter and the reported profit includes ~Rs800m of other income.
Steel expansions to be complete by Sep 2012; CPPs by end FY12
JSPL is targeting to commission the plate mill by March 2012; the 2.2mtpa DRI
plant and 1.6mtpa steel melting shop (SMS) by September 2012. We see risk of
delays here and have built in Angul commissioning in Apr-13. There are still few
clearances left for the Tamnar II (2,400MW) project of Jindal Power – Chattisgarh
Mining Development Corporation has raised objection against the project. The
company is however guiding for the first unit of 600MW to be commissioned by
September 2013 – which looks aggressive. The seven 135MW captive units are
expected to commission by end of FY12.
FY12-13 earnings cut by 3-5%; TP cut to Rs545, Maintain O-PF
We are cutting FY12-13 earnings by 3-5% to factor in delays and lower
profitability of the captive power plants and higher costs for the steel business.
Our SOTP target price has been cut to Rs545. Potential upside to our estimates
can come from the company’s operations in S Africa and Indonesia which they are
planning to ramp-up over the next 12 months. 3Q could be a good quarter for
merchant tariffs but the company usually does not sell more than 15-20% of its
volumes via exchanges. Low cost advantages and higher fuel security makes us
prefer JSPL over its power peers. Relatively lesser risk to earnings from lower
steel prices in a slowing world makes us prefer JSPL over its steel peers.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
2QFY12 results
JSPL’s 2Q consolidated net profit at Rs8.9bn, flat YoY, was 6% below our
estimates. Pre-exceptional PBT for the standalone entity was 6% ahead of our
estimates due to strong steel and pellet volume growth. The reported net
profit was impacted by write-off of some overseas mining investments and
forex translation losses. Performance of Jindal Power was in line with our
estimates. JPSL is targeting to complete its steel expansions by Sep 2012 and
commission the balance captive units by March 2012. We are however cutting
earnings for FY12-13 by 3-5% to factor in higher costs and delays in projects.
Our SOTP based TP is now Rs545/sh and we maintain O-PF on the stock.
Standalone financials – pre-exceptional PBT ahead of estimates
JSPL’s standalone pre-exceptional PBT was 6% ahead of our estimates mainly due
to higher steel (up 29% YoY) and pellet sales (up 25x YoY on low base). The
reported net profit was however lower than our estimates due to forex loss of
Rs1bn and write off on investments in Congo mines to the tune of Rs1.47bn.
While the first captive unit of 135MW has stabilized at Angul, the two units at
Raigarh are still operating at ~50% PLF and incurring losses.
Jindal Power – 2Q performance in line
Jindal Power’s 2Q net profit at Rs4.1bn, down 11% YoY was in line with our
estimates. Power generation was up 3.6% YoY and the average PLF during the
quarter was 92.5%. The average merchant power realization was Rs3.75/kWh
during the quarter and the reported profit includes ~Rs800m of other income.
Steel expansions to be complete by Sep 2012; CPPs by end FY12
JSPL is targeting to commission the plate mill by March 2012; the 2.2mtpa DRI
plant and 1.6mtpa steel melting shop (SMS) by September 2012. We see risk of
delays here and have built in Angul commissioning in Apr-13. There are still few
clearances left for the Tamnar II (2,400MW) project of Jindal Power – Chattisgarh
Mining Development Corporation has raised objection against the project. The
company is however guiding for the first unit of 600MW to be commissioned by
September 2013 – which looks aggressive. The seven 135MW captive units are
expected to commission by end of FY12.
FY12-13 earnings cut by 3-5%; TP cut to Rs545, Maintain O-PF
We are cutting FY12-13 earnings by 3-5% to factor in delays and lower
profitability of the captive power plants and higher costs for the steel business.
Our SOTP target price has been cut to Rs545. Potential upside to our estimates
can come from the company’s operations in S Africa and Indonesia which they are
planning to ramp-up over the next 12 months. 3Q could be a good quarter for
merchant tariffs but the company usually does not sell more than 15-20% of its
volumes via exchanges. Low cost advantages and higher fuel security makes us
prefer JSPL over its power peers. Relatively lesser risk to earnings from lower
steel prices in a slowing world makes us prefer JSPL over its steel peers.
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