5 JINDALSTEL share price target reports by brokerages below. See what is analyst's view on JINDALSTEL share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
Jindal steel & Power’s (JSP) Q4FY20 EBITDA came ahead of our/consensus estimates by 11%/9% at Rs22.2b, led by higher margins in India and Shadeed steel operations. EBITDA of Domestic steel/Shadeed/Jindal power (JPL) rose 16%/93%/30% QoQ (+8%/+82%/25% YoY). Aided by lower interest cost, quarter turned black with PBT (before exceptional) of Rs1.9bn (PLe:loss of Rs1.5bn) against loss of Rs2.0bn/Rs4.0bn in Q3FY20/Q4FY19. Net debt rose marginally 1.3%/Rs4.6bn QoQ (↓8% YoY/Rs31.7bn) to Rs359.2bn due to adverse FX translation of Rs7.4bn. It would continue to reduce debt by Rs25-30bn on the back of higher utilisations, lean capex and lower iron ore cost with the availability of inventory lying at Sarda mines. Our debt reduction estimates do not factor saving from restructuring of debt in Australian operations and realisation of dues from SEBs. In spite of weak domestic demand, JSP maintained its volumes at last year levels in April and May on the back of strong push in exports. Lower realisations in exports would be offset by lower iron ore and coking coal cost. Driven by steady reduction in debt and stable operations, we reiterate BUY with TP of Rs150.
JSPL’s ability to export volumes during Apr’20 provides confidence to our expectation of ~2% decline in FY21E volumes. Restructuring of debt in Australian operations during 4QFY20 should help JSPL meet its debt obligations comfortably in Indian and other overseas operations. We expect JSPL to reduce its net debt by INR77b over FY20E-22E to INR272b. This would be achieved through free cash flow generation on the back of higher earnings and lower capex. At CMP, the stock trades at 4.1x FY22E EV/EBITDA. We value JSPL stock using SoTP methodology and value the steel business at 4.0x. The power business is valued using DCF method. We arrive at a target price of INR150/share. Our valuation of the power business translates to an EV of INR40m/MWH capacity, which is at ~40% discount to the replacement value. Equity value of the power business (JPL’s estimated net debt at INR60b FY22E) works out to INR76/share. Hence, the steel business of JSPL is available virtually free at the current stock price. Reiterate Buy.
Jindal steel & Power (JSP) posted Q3FY20 11%/34% QoQ growth in EBITDA/Cash profit at Rs18.2bn/Rs8.2bn, in line with our estimate of Rs17.8bn/Rs7.7bn. Led by optimization of working capital and improved earnings, Net debt fell 2.8% QoQ/Rs10.4bn (↓10%/Rs37.4bn YoY) to Rs354.6bn. Management expects domestic steel margins to improve by ~20% QoQ to Rs10000/t on account of price hikes undertaken (to the tune of Rs2,500/t in past couple of months) and lower coking coal costs. JPL delivered yet another strong quarter with 42% beat to our EBITDA estimates, driven by higher realisations. Profitability would further improve on the back of better coal availability.
Led by strong improvement in steel operations and continuous reduction in debt, we reiterate our positive outlook on JSP. Our earnings don’t factor in contribution of volumes from Angul DRI plant (EBITDA potential of Rs5bn), lower iron ore cost due to lifting of 15mnt of iron ore inventory lying at Sarda mines (one- time gain of Rs15bn) and debt restructuring in Australian operations. We maintain BUY rating with TP of Rs190, EV/EBITDA of 5.9x FY21e.
In recent times, JSPL’s stock has re-rated (up ~55% over the past two months) on expectations of (a) benefit of coal block allocation (Gare Palma), (b) possible positive verdict on the Sarda mines case and (c) a recovery in steel prices. Domestic and global steel prices have shown signs of recovery over the past two months which is a positive. We do not build in any benefit from offtake of iron ore from the Sarda mines as the final verdict is still awaited. Favorable verdict for the same would drive an upside to our numbers. We note that the stock may remain volatile over the near term on news flow related to the same. We continue liking JSP as major capex is now behind and FCF generation should continue along with ramp- up in volumes. Re-iterate Buy with an SOTP-based target price of INR175.
The company remains focused on debt reduction. We expect JSP to generate significant consolidated free cash flow (as major capital expenditure is now behind), which will help reduce leverage – INR365b net debt as of Sep’19 with ~5x net debt/ EBITDA. JSP is also pursuing overseas asset monetization (including stake sale in Oman), which when successful would aid further deleveraging. The stock trades at an attractive valuation of 5.7x FY21E EV/EBITDA and 4x FY21 cash P/E. Reiterate Buy with a target price of INR184 based on SOTP.
Juxtapose to its peers, JSP reduced debt by ~21% over last 3.5 years on the back of lean capex, improved earnings and strong control on working capital. It would continue to reduce debt by 10% for next couple of years without factoring benefit from new PPAs and recently won Garepalma IV/1 Coal block. We remain positive on JSP on the back of fully stabilized domestic steel operations, strong scope for increase in JPL’s PLF and continuous reduction in debt. We maintain BUY rating with TP of Rs170, EV/EBITDA of 5.5x FY21e.
Accumulate with a target price of Rs125: In spite of tight liquidity and volatile demand environment, JSP delivered on both 1) smooth stabilization of new capacity and 2) debt reduction. However, we do agree that next couple of quarters would be critical for JSP as quality of its operations would be tested to the maximum for its ability to repay/refinance the quantum size of debt scheduled for repayment, in the rest of FY20. We remain upbeat on stock given the improved profitability of its domestic steel operations and substantial scope for earnings growth in JPL, impacted by absence of PPA and shortage of domestic coal.
We believe JSPL is better placed than peers in a challenging price environment owing to its imminent production ramp-up and product mix improvement. Moreover, theFY20 deleveraging target of INR40bn is an additional value driver. Maintain ‘BUY/SO’with a TP of INR150. The stock is trading at 5.1x FY21E EBITDA.
We do agree that next couple of quarter would be critical for JSP, as quality of its operations would be tested to the maximum for its ability to repay/refinance the quantum size of debt maturities scheduled in rest of FY20. We remain upbeat on stock given its stable earnings profile and consistent delivery on deleveraging unlike its peers. We expect debt to come by ~Rs51bn over FY20-FY21E with Net debt/EBITDA below 4x (from current 4.4x). We maintain Accumulate with TP of Rs128, EV/EBITDA of 5.4x FY21e.
Outlook & Valuation: Given the ongoing global trade concerns, we expect steel prices to remain volatile along with increasing iron ore prices due to Vale incidence. However, we project that domestic demand will continue to remain positive for steel and power sectors on long term basis, and expect JSPL to perform well in coming years along with the ramp-up of Angul plant and realizations in steel segment. We also anticipate that power segment will perform well on account of improving visibility of PPA (short and long term) and various efforts by GoI for availability of fuel to power generators. We maintain our Buy recommendation on JSPL with a Target Price of `250 with a potential upside of 64% over a period of next 9-12 months.
Earnings below expectations; Downgrade to Accumulate Jindal Steel & Power (JSP) reported Q4FY19 earnings below our estimates due to weaker-than-expected realisations in domestic steel operations and Jindal Power (JPL). Also, domestic steel unitary EBITDA margins fell 17%/Rs1,600/t QoQ (down 23%/Rs2,860/t) to Rs9,590 (PLe: Rs9,845), due to weaker than expected realisations. Angul (BF +BoF) steel operations stabilized in Q4FY19 with 88-90% utilisation levels. Given the weak operating performance and fall in realisations, we cut our EBITDA estimates by 0.9% for FY21E. We downgrade our rating to Accumulate (earlier BUY) with TP of Rs171 (earlier Rs210), EV/EBITDA of 5.5x (earlier 6x) FY21e.
Outlook and valuation: Growth catalysts in place; maintain ‘BUY’. We see JSPL better placed than peers in a challenging price environment owing to its imminent production ramp up and product mix refinement. Moreover, deleveraging target of INR70bn is an additional value driver. Our revised TP works out to INR210 (earlier INR225). The stock is trading at 5.3x FY21E EBITDA. We maintain ‘BUY/SO’.
JSP remains focused on debt reduction. USD740m (total: USD1.8b) debt of global venture has been restructured at LIBOR plus 350bp. JSP is also pursuing asset monetization, including stake sale in Oman through a structured deal. The stock trades at an attractive valuation of 6.4x FY20E EV/EBITDA, 3.6x cash P/E and an FCF yield of ~16%. We value the stock at INR287 (SOTP-based).
Given the ongoing global trade concerns, we expect steel prices to remain range bound. However, we project that domestic demand will continue to remain positive for steel and power sectors on long term basis, and expect JSPL to perform well in coming years along with the ramp up of Angul plant and realizations in steel segment. We also anticipate that power segment will perform well on account of improving power demand situation and various efforts by GoI for availability of fuel to power generators. We maintain our Buy recommendation on JSPL with revised target.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
DISCLAIMER: Information is provided "as is" and solely for informational purposes, not for trading purposes or advice, and may be delayed. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and FrontPage will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein.