Jindal Steel & Power Q3 Results Review - Strong Operating Performance: Prabhudas Lilladher

Prabhudas Lilladher Report

Jindal steel & Power Ltd.'s reported strong operating performance in Q3, despite weak volume growth (-5% YoY) in standalone business. Ebitda was better than our estimates, given strong realization and operating performance from overseas mining subsidiaries which aided margins.

Average Q3 coking coal cost increased by ~$32/tonne QoQ to $281/tonne which is expected to rise further by ~$15/tonne in Q4. We believe with improving product mix and expected volume growth, Jindal steel & Power is better placed amongst peers.

JSPL is well poised to take dual benefit of volume growth and improvement in product mix over FY23-26E. Incremental volumes from pellet plant, conversion of semis at hot strip mill and cost savings from captive coal mines would contribute to Ebitda margins.

We expect revenue/Ebitda/profit after tax compound annual growth rate of 8%/13%/26% over FY23- 26E. At current market price, the stock is trading at 6.9 times /5.7 times enterprise value of FY25E/FY26E Ebitda.

Maintain ‘Buy’ rating with revised target price of Rs 842 (earlier Rs 826) valuing at six times enterprise value of March 26E Ebitda.

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