Buy Jindal Steel & Power; target of Rs 960: Motilal Oswal

Motilal Oswal's research report on Jindal Steel & Power

3QFY25 revenue stood at INR118b (flat YoY/+5% QoQ), below our estimate of INR134b, due to lower-than-expected sales volumes. Sales volume came in at 1.9mt (+5% YoY/+3% QoQ) vs. our est. of 2.18mt. Production volume was at 1.99mt (+3% YoY/+1% QoQ). Owing to better long steel prices, ASP came in line at INR61,846/t (-4% YoY and +2% QoQ) during the quarter. EBITDA stood at INR22b (-23% YoY/flat QoQ) vs. our est. of INR27b, resulting in EBITDA/t of INR11,494/t (-27% YoY/-3% QoQ) vs. our est. of INR12,254/t. The QoQ per-ton decline was caused by cost escalation due to lower iron ore production from Tensa mine, which was partly offset by lower coking coal cost by USD39/t in 3Q.

Outlook

We maintain our BUY rating with a revised TP of INR960, based on 5.5x FY27E EV/EBITDA. The stock is currently trading at 5x on EV/EBITDA and 1.2x on P/B FY27 estimates.