Jindal Steel And Power Q1 Review - Strong All-Round Performance Despite Weakness In Realisation: IDBI Capital

IDBI Capital Report

Jindal Steel and Power Ltd.’s Q1 FY25 revenue and profitability were ahead of our forecast. Revenue was up 1% QoQ to Rs 136.2 billion, driven by a volumes growth of 4% QoQ on the back of strong domestic demand and higher sale of HSM products. However, realisation declined by 2% QoQ due to weak steel prices.

The contribution of value added products in total volumes stood at 60% in Q1 FY25 (versus 63% in Q1 FY24). Ebitda margin expanded 273 bps QoQ, led by decline in coking coal and iron ore price. Also, Ebitda/tonne improved QoQ to Rs 13,585.

JSPL is confident of maintaining 2 million tonne quarterly run rate in FY25. We cut our FY25E/FY26E Ebitda estimate by 4%/6%, respectively and value the stock based on EV/Ebitda multiple of seven times FY26E Ebitda to derive a target price of Rs 952 (earlier Rs 863). We maintain Hold rating on the stock given our neutral stance on the steel sector due to rising exports from China.

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