Reduce Jindal Steel; target of Rs 407: Dolat Capital

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26 Aug, 2025 12:21

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Dolat Capital is bearish on Jindal Steel & Power and has recommended reduce rating on the stock with a target of Rs 407 in its February 13, 2013 research report.
 
“Jindal Steel & Power, Standalone revenue grew 14.7percent YoY to Rs 37.8bn, marginally below expectation of Rs 38.4bn. Company sold 733k tonnes (up 24percent YoY and 15percent QoQ) of steel and 623k (up 34percent YoY and 43percent QoQ) tonnes of pellet during the quarter, in line with our estimates. Captive power plants continue to operate at dismal PLF of 50percent and generated 1544 mn units (5.97percentQoQ) EBITDA grew in-linewith- our expectation at Rs 12.4bn (DCe: Rs 12.34bn), up 2percent QoQ. Increase in interest cost (85percentYoY,+61percentQoQ at Rs 2.87bn led to PAT of 13percent YoY to Rs 5.2bn (DCe: Rs 5.45bn) JPL’s 1000 MW operated at 81percent PLF during the quarter, against 102percent LY and in-line with our expectation.”
 
“JPL reported 30percent YoY drop in revenue at Rs 5.6b (DCe: Rs 5.34b) primarily due to weak realisation and lower volumes. Realisations dropped to Rs 3.2/kwh against Rs 4.1 and Rs 3.3 in Q3FY12 and Q2FY13 respectively. Dispatches were impacted by evacuation constraints whereas realizations were impacted due to higher sales of power in the spot market. JPL reported PAT of Rs 2.6b (DCe: Rs 2.9b), down 47percent YoY. Shadeed reported earnings ahead of our expectation with EBITDA at US$28m (DCe: UD$17m) and PAT of US$18m (Dce:US$8m) on the back of higher-thanexpected volumes and increase in spreads.Consoldiated EBITDA fell 4percent YoY to Rs 16.7bm, below our expectation of Rs 17.28bn on the backdrop of lower than expected earnings in JPL. Adjusted PAT fell 13percent to Rs 8.67bn (DCe: Rs 9.42bn) due to sharp increase in interest cost and lower EBITDA.”
 
“JSPL also indicated that the power realization would be capped in near term due to sales in power exchange market whereas the PLF would improve in Q4FY14 as the evacuation constraints have eased in near term. JSPL has still not been able to execute the mining lease of Utkal BI coal block which is critical for improved profitability of the Angul steel plant. Other overhangs remain the allegation revolving around Sarda mines and the capping of power tariffs at JPL. We would wait for the mining lease for Utkal B1 block for a review on the stock and maintain a Reduce on JSPL with a price target of Rs 407, given the regulatory uncertainty, weak steel prices and weaker return profile of the new projects,” says Dolat Capital research report.

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