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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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3QFY15 EBITDA miss due to lower generation/realization at Jindal Power JSP’s consolidated EBITDA (`15.6 bn, down 9% yoy and 5% qoq) was 5% lower than our estimate. It excludes `0.6 bn towards an additional levy (`295/ton) for coal mined during the quarter (per SC order, included under exceptional items). The miss was largely due to lower EBITDA at Jindal Power (`4.1, down 21% qoq) because of lower generation (down 4% qoq) and realization (down 8% qoq). JSP reported a net loss of `16.2 bn (`4.4 bn net income in 2QFY15) due to exceptional items of (1) `18.5 bn towards additional levy for coal mined before September 2014 as per the SC order (while JSP paid `30.9 bn towards this liability, it has only charged a part of this to its P&L), and (2) `1.3 bn forex loss. Sustainability of EBITDA margin difficult to explain in challenging market conditions JSP’s standalone EBITDA increased 4% qoq to `10 bn (-17% yoy) and was 7% higher than our estimate. It reported a flat qoq EBITDA/ton of `14,000 (blended) on steel deliveries of 715 kt (down 7% yoy, +4% qoq). It was able to sustain steel margins despite challenging market conditions such as (1) a sharp fall (4%, ~`1,500/ton) in domestic steel prices and (2) higher rawmaterial costs due to external purchases. It sourced external iron ore in the quarter due to suspension of operations at Sharda mines and used external coal in the ramp up of its Angul steel plant. JSP’s flat sequential steel margins either reflect a substantial improvement in its product profile or higher profitability from power/pellets business. However, (1) pellet production declined 19% qoq to 745 kt (-29% yoy) and (2) while power EBIT increased by `0.6 bn qoq, the rise is not large enough to explain the gap. We seek clarity on steel profitability. Jindal Power—lower-than-estimated generation partially offset by sustained contribution Jindal Power reported revenues of `8.2 bn (+36% yoy, -11% qoq), EBITDA of `4.1 bn (+10% yoy, -21% qoq) and net income of `2.7 bn (+34% yoy, -4% qoq) against our estimates of `9.7 bn, `5.5 bn and `2.9 bn, respectively. Lower generation (2,699 MU versus KIE’s 2,900 MU) and weak blended realizations (`3.3/kwh versus `3.6/kwh in 2QFY15) led to the revenue miss. JPL is likely to have accrued a levy of `10.6 bn during the quarter because of the Supreme Court’s order after the de-allocation of associated captive mines.
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily04022015rq.pdf
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.
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
3QFY15 EBITDA miss due to lower generation/realization at Jindal Power JSP’s consolidated EBITDA (`15.6 bn, down 9% yoy and 5% qoq) was 5% lower than our estimate. It excludes `0.6 bn towards an additional levy (`295/ton) for coal mined during the quarter (per SC order, included under exceptional items). The miss was largely due to lower EBITDA at Jindal Power (`4.1, down 21% qoq) because of lower generation (down 4% qoq) and realization (down 8% qoq). JSP reported a net loss of `16.2 bn (`4.4 bn net income in 2QFY15) due to exceptional items of (1) `18.5 bn towards additional levy for coal mined before September 2014 as per the SC order (while JSP paid `30.9 bn towards this liability, it has only charged a part of this to its P&L), and (2) `1.3 bn forex loss. Sustainability of EBITDA margin difficult to explain in challenging market conditions JSP’s standalone EBITDA increased 4% qoq to `10 bn (-17% yoy) and was 7% higher than our estimate. It reported a flat qoq EBITDA/ton of `14,000 (blended) on steel deliveries of 715 kt (down 7% yoy, +4% qoq). It was able to sustain steel margins despite challenging market conditions such as (1) a sharp fall (4%, ~`1,500/ton) in domestic steel prices and (2) higher rawmaterial costs due to external purchases. It sourced external iron ore in the quarter due to suspension of operations at Sharda mines and used external coal in the ramp up of its Angul steel plant. JSP’s flat sequential steel margins either reflect a substantial improvement in its product profile or higher profitability from power/pellets business. However, (1) pellet production declined 19% qoq to 745 kt (-29% yoy) and (2) while power EBIT increased by `0.6 bn qoq, the rise is not large enough to explain the gap. We seek clarity on steel profitability. Jindal Power—lower-than-estimated generation partially offset by sustained contribution Jindal Power reported revenues of `8.2 bn (+36% yoy, -11% qoq), EBITDA of `4.1 bn (+10% yoy, -21% qoq) and net income of `2.7 bn (+34% yoy, -4% qoq) against our estimates of `9.7 bn, `5.5 bn and `2.9 bn, respectively. Lower generation (2,699 MU versus KIE’s 2,900 MU) and weak blended realizations (`3.3/kwh versus `3.6/kwh in 2QFY15) led to the revenue miss. JPL is likely to have accrued a levy of `10.6 bn during the quarter because of the Supreme Court’s order after the de-allocation of associated captive mines.
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily04022015rq.pdf
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