Why Street is Growing Bullish on JSPL
Mumbai: Naveen Jindal-owned Jindal Steel & Power (JSPL) , which will commission its greenfield Angul plant next month, and the fact that it had a good December quarter, has created a strong interest among investors.
The commissioning of the 3.2 mt blast furnace at Angul is expected to ramp up the company’s volumes in the next two years. If steel prices hold, the company is expected to turn around in the next two years, reckon analysts, who expect it to post a steady rise in volumes and achieve 90% utilisation by FY19.
JSPL is expected to report a year-on-
year 32% jump in its FY17 EBIDTA, thanks to firm steel prices. With the commissioning of Angul and steady steel prices and demand, its EBIDTA is expect- ed to jump by 45% in FY18 to ₹ 6,500 crore, and ₹ 8,000 crore in FY19. In the December quar ter, JSPL’s EBIDTA jumped 50% quarter on quarter and 125% year-on-year to ₹ 1277 crore, driven by higher margins in its steel and power businesses.
Improving profits will reduce the debt worries for the company. Its current net debt is about ₹ 46,000 crore. According to reports, JSPL is also looking to exit its noncore businesses which will lower its debt.
On Monday, Jindal Steel & Power’s share price closed at ₹ 100.25, 7.8% higher than the previous close. On this closing, the company is trading 25% higher than FY19 EBIDTA and 40% higher than FY18 EBIDTA.