Buy Jindal Steel & Power; target of Rs 608: PLilladher

“Jindal Steel & Power (JSPL) reported 6.7% YoY growth in standalone EBITDA at Rs9.92bn, below our expectation of Rs10.5bn due to lower-than-expected pellet volumes (464k v/s PLe: 570k tonnes) and higher-than-expected RM cost. PAT fell by 8% YoY to Rs4.61bn due to higher depreciation and interest costs; short of our expectation of Rs5.05bn. JPL reported flat PAT YoY at Rs4.8bn, in line with our expectation. JPL realised Rs4 per unit with PLF at 102%. Aided by better-than-expected utilisation and lower pellet cost, Shadeed reported EBITDA and PAT ahead of our expectation at US$24m (US$14m) and US$14m (US$5m), respectively. This aided consolidated EBITDA and adjusted PAT fell in line with our expectation at Rs17.39bn (PLe: Rs17.25bn) and Rs9.71bn (PLe: Rs9.56bn), respectively.”

“We expect strong earnings growth in the range of 13-14% on the back of strong expansion pipeline in Power (10X135MW) and Steel (1.6mtpa) business, continued improvement in PLFs at commissioned power units and commencement of mining at 6mtpa captive Utkal B-1 coal mine. We reiterate ‘BUY’ rating, with TP of Rs 608; 6x EV/EBITDA steel earnings and JPL on DCF basis,” says Prabhudas Lilladher research report.   

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