Source: Motilal Oswal Securities
These pushed up consolidated revenue at Rs 6,127 crore (up 20 per cent y-o-y) and Ebitda at Rs 1,353 crore (up 33 per cent), ahead of the Bloomberg’s
estimate of Rs 6,000 crore and Rs 1,336 crore, respectively. Margins at 22 per cent were higher than 20 per cent a year ago. The improved operating performance helped to reduce net loss to Rs 421 crore (estimates pegged loss at Rs 449 crore), from Rs 1,240 crore in the June 2016 quarter. JSPL reported a cash profit of Rs 453 crore, against a cash loss of Rs 463 crore a year ago. The outlook for steel demand and prices remains good.
Ravi Uppal, executive director and chief executive officer of JSPL, said demand for value-grade products remains strong from Belgium, Spain and Germany, among others, and better international prices bode well.
The newly-commissioned 4mt blast furnace is expected to double steel production by the end of FY18. JSPL has also secured
0.511 mt coal linkages (75 per cent of requirement) for its captive power plants, which should keep costs under check, and is eyeing more linkages in fresh auctions. While the merchant power business may see demand getting impacted due to monsoons, management expects an improvement after that. JSPL is also working on refinancing borrowings to reduce interest costs.
Three of the four analysts polled by Bloomberg have a ‘buy’ on the stock (average target price Rs 163). Analysts at Motilal Oswal say JSPL is likely to benefit from an improvement in underlying drivers (higher coking coal prices, domestic coal supply, pellet export prices, and domestic long product prices) of earnings growth.
The JSPL stock fell three per cent on Wednesday to Rs 136, led by selling in broader indices.