Jindal Steel and Power shares dropped more than 6 per cent in trade on Wednesday after analysts flagged delays in execution.
Jindal Steel and Power was down 6.45 per cent in trade at Rs 593 on BSE.
Tushar Chaudhari – Research Analyst, Prabhudas Lilladher said in a note that commissioning of 5.5mtpa Hot Strip Mill (HSM) is on track to be completed in 3QFY24 but expect delay in commissioning of 3mtpa BOF-III. BOF-II timeline further pushed by two quarters to 4QFY25.
Production from Utkal C coal mine to start by December-23. JSPL has tweaked its capex plan over last few months which has led to an increase in capex requirement to Rs 310 billion from earlier Rs 240 billion.
“We cut FY24/25E EBITDA estimates by 9 per cent/7 per cent on higher coking coal price assumption and delays in capacity addition respectively”, the note said.
Jindal Steel and Power (JSP) reported strong operating performance in 2Q, driven by 9 per cent QoQ volume growth in standalone business. EBITDA was in line with our estimates as lower than expected realization was compensated by better volumes. Average coking coal cost for 2Q was lower by USD70/t QoQ which is expected to increase by USD55/t in 3Q.
JSP is well poised to take dual benefit of volume growth and improvement in product mix over FY23-26E post commissioning of HSM; however, there has been delays of few quarters in blast furnace commissioning which would impact FY25 volumes, the note said.
“We have cut our FY25 volume assumption accordingly and introduce FY26 estimates. Incremental volumes from pellet plant and cost savings from captive coal mines would contribute to FY25 EBITDA margins”, it added.
(Sanjeev Sharma can be reached at Sanjeev.s@ians.in)
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