Motilal Oswal's research report on Jindal SteelIn 4QFY16, Jindal Steel & Power’s (JSPL) consolidated EBITDA increased by 63% QoQ to INR9b, driven by a stronger performance of the standalone business (JSPsa), Oman and a decline in losses at its overseas mines. Jindal Power Ltd. (JPL) disappointed in the quarter by reporting lower margins. Interest cost increased by 6% QoQ to INR8.6b. Depreciation rose sharply by 47% QoQ to INR9.3b, due to a change from SLM to WDV for power assets. Loss before tax declined by 15% QoQ to INR6.8b. We are raising our margin estimate for the steel business by INR800/t in view of the recovery in Indian steel prices and the company’s cost reduction. JPL’s earnings are likely to improve after the commencement of power supply to Kerala PPAs. The merchant power market has also improved recently. We are also raising our consolidated EBITDA estimate for FY17E from INR42.6b to INR46.2b. Net debt stands at 13.4xFY16. Maintain Neutral. For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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