Buy Jindal Steel & Power; target of Rs 1240: ICICI Securities

ICICI Securities's research report on Jindal Steel & Power

Jindal Steel & Power's (JSPL) Q4FY24 EBITDA was slightly ahead of street estimates. Key points: 1) Sales volume was up 11% QoQ aided by higher exports; 2) standalone EBITDA/t was down 17% QoQ mainly due to negative price-cost effect; 3) impairment of INR 3.6bn in Australian operations as mines remain care and maintenance; and 4) net debt rose to INR 112bn owing to capex spend. Going ahead, we believe spreads are likely to improve as the management has taken a price hike of INR 1,000/te on average and coking coal cost is likely to be lower by USD 30-40/te. Besides, ensuing cost efficiencies from commissioning of slurry pipeline and ramp-up of captive coal mines may shore up profitability.

Outlook

We maintain BUY on JSPL with an unchanged TP of INR 1,240 on 7.5x FY26E EBITDA.