Why Street is Grow­ing Bullish on JSPL

The Economic Times - - Brands & Companies -

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.

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