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

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Jindal Steel & Power's (JSPL) consolidated Q3FY15 EBITDA of INR15.6bn dipped ~9% YoY, owing to weak performance by standalone and Jindal Power (JPL). Standalone EBITDA at INR10.0bn fell ~17% YoY on drop in both EBITDA/t and adjusted volumes. JPL also disappointed with EBITDA of INR4.1bn, ~11% below estimate, owing to lower-than-expected PLF in the new 4X600MW power plant. JSPL reported consolidated net loss of INR16bn due to extraordinary loss of INR18bn. Net debt rose by INR43bn QoQ to INR419bn. Factoring in subdued Q3FY15 performance and weak global fundamentals of steel sector, we prune FY15E/FY16E EBITDA by ~14%/10%, and introduce FY17 estimates with EBITDA growth of ~9%.

Standalone EBITDA down ~17% YoY

JSPL posted standalone EBITDA of INR10.0bn, down ~17% YoY (up ~4% QoQ) following drop in both EBITDA/t and adjusted volumes. The company had to meet almost 2/3^rds of its iron ore requirement from external purchases resulting in ~12% QoQ rise in raw material costs. Standalone power EBIT at INR3.1bn surged 64% YoY and 27% QoQ. JSPL reported net loss of INR6.7bn due to extraordinary loss of INR0.8bn paid as additional levy on total coal extracted up to September 24, 2014.

Performance of subsidiaries: JPL ramp up slow

JPL reported EBITDA of INR4.1bn (down ~3% YoY, ~21% QoQ), ~11% below estimate, on lower-than-expected PLF in the new 4X600MW power plant. Blended EBITDA/unit, at INR1.7, was broadly in line. International subsidiaries reported EBITDA of INR1.4bn versus estimated INR1.3bn. The HBI unit in Oman operated at almost full capacity, while units in Australia and South Africa suffered due to environmental clearance and labour productivity issues. Losses in Mozambique continue.

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https://www.edelweiss.in/research/Jindal-Steel-And-Power--Uncertainties-Ahead;-Result-Update-Q3FY15/28254.html