Reduce Jindal Steel & Power, target price Rs 295: ICICI Securities

ICICI Securities has reduce call on Jindal Steel & Power with a target price of Rs 295. The current market price of Jindal Steel & Power is Rs 350.2. Time period given by analyst is one year when Jindal Steel & Power Ltd. price can reach defined target.

Jindal Steel & Power Ltd., incorporated in the year 1979, is a Mid Cap company (having a market cap of Rs 35652.08 Crore) operating in Metals - Ferrous sector.

Jindal Steel & Power Ltd. key Products/Revenue Segments include Iron & Steel Items, Power, Other Sales, Other Operating Revenue, Export Incentives, Scrap for the year ending 31-Mar-2021.


Financials
For the quarter ended 30-06-2022, the company reported a Consolidated Total Income of Rs 13069.17 Crore, down -8.87 % from last quarter Total Income of Rs 14341.91 Crore and up 22.79 % from last year same quarter Total Income of Rs 10643.17 Crore. Company reported net profit after tax of Rs 2770.92 Crore in latest quarter.

Investment Rationale
Jindal Steel and Power (JSPL) reported better-than-expected EBITDA in Q1FY23. Timing of sales and inventory helped report an EBITDA beat. EBITDA/te (adjusted for forex gains) increased ~Rs2,900/te QoQ to reach Rs16,464/te in Q1FY23. Marginal net debt reduction of Rs11bn QoQ disappointed. Working capital buildup of Rs25-30bn did offset an impressive operational performance of +Rs30bn cashinflow on the completion of the JPL deal. Overseas operations continue to witness improvement QoQ (on price increase and not necessarily volumes). It expects a significant contraction in Q2FY23 EBITDA, and the clarity for an improvement in Q3FY23 is still lacking. Management expects to become net debt free by FY23E given the expected accruals. The tie up of project financing (Rs150bn) for Angul expansion was projected as a normal business practice. It maintains REDUCE.

Promoter/FII Holdings
Promoters held 60.45 per cent stake in the company as of 31-Mar-2022, while FIIs owned 9.7 per cent, DIIs 17.34 per cent.