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Centrum Broking Report
While JSW Steel Ltd.'s (JSTL) consolidated Ebitda grew 1.4% QoQ to Rs 104 billion, in line with our estimate, standalone numbers (Ebitda of Rs 86.7 billion, down 9% QoQ; CentrumE: Rs 98.5 billion) disappointed us due to higher-than-expected production cost.
While usage of old inventory restricted cost increase in coking coal, it hit iron ore cost in Q2 FY22. Despite higher realisation, the raw material and power cost increase squeezed Ebitda/t by Rs 3,400 to Rs 22,884/t.
The performance of its subsidiaries has improved QoQ. JSTL now holds 83.28% stake (earlier 49% stake) in Bhushan Power via SPV and will be consolidated from Q3 FY22.
Accordingly, we increase our FY22E/FY23E Ebitda by 18%/19% to consolidate Bhushan numbers while keeping standalone numbers unchanged.
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