5 May 2020
Update | Sector: Metals
Jindal Steel & Power
BSE SENSEX
31,454
S&P CNX
9,206
CMP: INR86
TP: INR150 (+75%)
India steel production up 5% YoY in Apr’20
Buy
Stock Info
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
Highlights from Jindal Steel and Power’s (JSPL) Apr’20 operational update:
JSP IN
1,016
India steel operations
87.7 / 1.2
JSPL produced 550kt steel and related products during Apr’20 (up 5% YoY). This
202 / 62
was on the back of record high production from the Angul Blast Furnace, which
22/-14/-33
produced 298kt hot metal, clocking 10kt daily. Other related products include
2863
granulated pig iron and other intermediary products.
39.6
Though domestic demand remained dry during the month, production was
Financials Snapshot (INR b)
Y/E MARCH
2020E 2021E 2022E
Sales
371.1 351.0 411.3
EBITDA
76.0 92.2 87.5
Adj. PAT
-6.7
8.4 9.0
EBITDA Margin (%)
20.5 26.3 21.3
Cons. Adj. EPS (INR)
-6.5
8.3 8.8
EPS Gr. (%)
-299.4 -226.8
6.3
BV/Sh. (INR)
317.6 325.9 334.8
Ratios
Net D:E
1.1 0.9 0.8
RoE (%)
-2.0
2.6 2.7
RoCE (%)
4.6 7.1 6.7
Exhibit 1: India Steel and related products – production and sales
Payout (%)
0.0 0.0 0.0
Steel and related product sales
Steel and related product production
Valuations
P/E (x)
P/BV (x)
EV/EBITDA(x)
Div. Yield (%)
-13.1
10.4
0.3 0.3
5.7
0.0
4.2
0.0
9.8
0.3
4.1
0.0
1,300
1,320
1,270
1,520
1,510
1,460
1560
1350
1360
1320
1570
1580
1610
1540
boosted by large export orders, primarily of billets from China due to the shortage
of intermediates there.
Apr’20 sales stood at 335kt, of which 248kt (74% of total) were exports.
Exports were up 109% MoM while implied domestic sales were down ~80% MoM.
The balance production in Apr’20 is at the ports, waiting to be exported out; sales
would be booked in May’20.
We note that while these export volumes would earn lower EBITDA margins
(likely ~INR5,000/t), it is still positive as this should help recover fixed costs if
plants earn positive cash flows, which is critical in this environment.
550
Shareholding pattern (%)
As On
Dec-19 Sep-19 Dec-18
Promoter
60.4
60.4
58.7
DII
13.0
11.1
9.3
FII
14.4
15.3
17.8
Others
12.2
13.3
14.3
FII Includes depository receipts
Stock Performance (1-year)
Jindal Steel
Sensex - Rebased
210
170
130
90
50
1,670
1,400
335
1QFY19
2QFY19
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
4QFY20
Apr-20
Source: MOFSL
Oman operations
JSPL’s Oman operations reported production of 106kt, down ~40% over the
normal monthly run-rate. However, the decline in sales volumes was lower at 33%
as the company sold ~120kt of steel during the month.
Amit Murarka
– Research Analyst
(Amit.Murarka@motilaloswal.com); +91 22 6129 1538
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.