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Last Updated : Dec 14, 2016 04:16 PM IST | Source: Moneycontrol.com

Buy Jindal Steel & Power; target of Rs 100: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Jindal Steel & Power has recommended buy rating on the stock with a target price of Rs 100 in its research report dated December 12, 2016.

 
 
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Prabhudas Lilladher's research report on Jindal Steel & Power


EBITDA of standalone ops fell 24% QoQ/31% YoY at Rs 4.3bn, below PLe of Rs 5.4bn. Loss of standalone ops expanded to Rs 4.1bn (PLe:Rs 2.9bn) against loss of Rs 2.8bn/Rs3.1bn in Q1FY17/Q2FY16. Shadeed posted 60% QoQ/25% YoY drop in EBITDA to US$13m (PLe:US$29m) due to sharp drop in realisations. Jindal Power (JPL) reported flat (+8% YoY) EBITDA to Rs 1.8bn (PLe:Rs 1.9bn). Consolidated EBITDA fell 23% QoQ (‐17% YoY) to Rs 6.7bn (PLe:Rs 9.2bn). Loss expanded to Rs 7.5bn (PLe:Rs 5.4bn) against loss of Rs 4.6bn/Rs 5.5bn in Q1FY17/Q2FY16.


Outlook

Jindal Steel and Power (JSP) reported Q2FY17 earnings below our expectation due to lower than estimated earnings in steel operations. JSP would be best placed to exploit the benefit of steep increase in steel prices as 70% of its production comes through non‐coking coal route. Earnings outlook for FY18 remains strong on the back of better outlook on steel prices, commissioning of BF in Angul and signing of PPA with UPSEB. We reiterate BUY with TP of Rs 100, valuing steel operations at 6x EV/EBITDA FY18E and JPL (3400MW) at Rs 45m/MW.

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First Published on Dec 14, 2016 04:16 pm
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