Motilal Oswal: Jindal Steel’s Q1 On The Path To Deleveraging   

Motilal Oswal Report

Jindal Steel and Power Ltd.’s Q1 FY21 result highlights the benefit of cost reduction in its steel operations. Q1 FY21 consolidated adjusted Ebitda was up 2% QoQ to Rs 22.6 billion (estimate: Rs 18.9 billion). Revenue/adjusted Ebitda/adjusted profit after tax came in at Rs 61.6 billion /Rs 17.1 billion /Rs 4.1billion, up 4%/up 9%/up 47% QoQ and up 2%/up 20%/ up 158% versus our estimate. The company received an insurance claim of Rs 1.2 billion during the quarter, which we have considered as an exceptional gain.

We raise Jindal Steel’s FY21/FY22 Ebitda estimates by 6%/5% to factor cost reduction demonstrated by the company. We expect Jindal Steel to reduce its net debt by Rs 83 billion (Rs 81 per share) to Rs 296 billion over FY20–22E. The Oman divestment deal, if approved, with an equity consideration of approximately 50 million U.S. dollar (net of inter-company loans of 200 million U.S. dollar ) would lead to an additional net debt reduction of approximately Rs 60 billion (Rs 59 per share). We have not factored the deal in our estimates. The divestment of the Oman business would lead to an improved focus on domestic operations.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. BloombergQuint does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the brokerage and do not represent the views of BloombergQuint.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.