Prospects for Jindal Steel don't look good: Phani Sekhar

Phani Sekhar, fund manager of Angel Broking told CNBC-TV18, "If we analyse Jindal Steel & Power (JSPL), the main competitive advantage for this company is the captive coal blocks. It is the source of the abnormally high return on equity and return on capital that JSPL earns as compared to its peers."

He further added, "If we have a needle of suspicion and an investigation on that very source of competitive advantage which is the captive coal blocks then over the medium-term to long-term it has the prospect of severely eroding the value for shareholders."
"Consider the fact that this stock trades at a significant premium to the normal price to book value to the multiples that one would associate with this industry. So combining both the two, I think the prospects for this company over the medium-term don’t look too good both from the earnings point of view as well as from the valuation de-rating point of view," Sekhar said.