Buy Jindal Stainless: Pioneer Intermediaries

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Buy Jindal Stainless: Pioneer Intermediaries

Broking house, Pioneer Intermediaries is bullish on Jindal Stainless. It has maintained buy rating on the stock.

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Broking house, Pioneer Intermediaries is bullish on Jindal Stainless . It has maintained buy rating on the stock.

The Pioneer Intermediaries report on Jindal Stainless:

"Jindal Stainless, JSL reported a healthy topline of Rs 12.4 billion in Q2FY07, a growth of 40% YoY and 31% QoQ mainly due to spurt in SS prices due to historical rise in global nickel prices."

"Production volumes at 148k MT in Q2FY07 increased by 13% YoY and 17% QoQ. However, sales volumes lagged production volumes and were lower at 118k MT during the quarter, as export shipment of ~20-24k MT was stuck at ports, and has been spilled over to Q3FY07."

"Export sales at 77k MT, were up by 32%YoY and 52% QoQ, on back of strong demand in overseas market, particularly of low nickel content-200 series. However, domestic sales continue to decline and were 41k MT (-43% YoY and -34% QoQ), as the company is shifting focus on exports markets, and high end products used in architecture building and industrial applications."

"Net realisations, at Rs 97k / MT in Q2FY07, spurt by 57% YoY and 28% QoQ, as the company implemented a series of price hikes. Global SS prices have been on an upward trend since Feb'06, tracking nickel prices. LME nickel prices averaged $29k/mt in Q2FY07, a rise of almost 100% YoY and 47% QoQ."

"Operating profits more than doubled YoY to Rs 2.3 billion in Q2FY07. OPM increased (by 620 bps YoY and 390 bps QoQ) to 20.1% in Q2FY07, on back of surge in SS prices. Similarly, op. profit per ton surged to Rs 19.5k/MT in Q2FY07 (+127% YoY and +59% QoQ). However, part of the jump can be attributed to nonrecurring gains on nickel trading."

"Despite high capital charges, due to capex at Hisar and Orissa, net profits of JSL jumped by 120% YoY to Rs 971 million in Q2FY07."

"JSL made a promising comeback in H1FY07, after a disappointing performance in FY06. Also, considering buoyant stainless steel cycle and high nickel prices, JSL is expected to emerge as major beneficiary, Hence, we maintain our 'Buy' recommendation."