Motilal Oswal's research report on JSW Steel
JSTL posted revenue of INR422b in 1QFY24 (up 11% YoY), 6% above our estimate of INR397b. ASP stood at INR73,928/t (higher than our estimate of INR71,327/t). EBITDA stood at INR70b (up 64% YoY), 43% above our estimate of INR49b. EBITDA was supported by better performance of its Ohio and European subsidiaries, better realizations in export markets, and lower input costs. EBITDA/t stood at INR12,340/t vs. our estimate of INR8,715/t. APAT jumped 179% YoY to INR23b, aided by better operating performance and lower depreciation, offset by higher-than-expected tax outgo. Combined crude steel production (incl. JISPL) stood at 6.4mt (+12% YoY/- 2% QoQ). Sales volumes came in at 5.7mt (+27% YoY/-13% QoQ). Due to some scheduled shutdowns at Indian operations during the quarter, the average capacity utilization was 92% (96% in 4Q FY23). Steel sales were affected by channel destocking. Exports were hit by delayed loading due to a cyclone on the western coast of India at 1Q end. Net debt stood at INR672b, with a net debt-to-EBITDA ratio of 3.14x (down from 3.2x in 4QFY23).
Outlook
We believe the current valuations at 6.3x FY25E EV/EBITDA and 2.1x FY25E P/B fully price in the positive factors. We reiterate our Neutral rating on the stock with a revised TP of INR730 (INR710 earlier).
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