JSW Steel reported better than expected standalone numbers for 2Q FY 2012.
Although JSW Steel’s crude steel production increased by 10.6% yoy to 1.7 mn
tonnes, production was lower by at least 0.5 mn tonnes on account of shortage of
iron ore.
Despite lower production, standalone net sales grew by 33.5% yoy
to Rs.7,625 cr, in-line with our estimate of Rs.7,607 cr. Net sales growth was driven by
the increase in steel sales volumes (up 18.9% yoy to 1.9mn tonnes) as well as
blended realizations (up 14.6% yoy to Rs.42,831/tonne).
However, EBITDA/tone grew only by 9.9% yoy to Rs.6,887 due to higher raw-material costs. EBITDA
increased by 30.6% yoy to Rs.1,296 cr. The company reported exceptional items
related to forex loss of Rs.513 cr during the quarter. Consequently, net profit
decreased by 71.5% yoy to Rs.127 cr. However, adjusted net profit, excluding
exceptional items, increased by 43.7% yoy to Rs.640 cr (higher than our estimate
of Rs.432cr).
The company has now lowered its production and sales volumes
estimates for FY 2012 and FY 2013 by 14.0% and 13.0% to 7.5 mn tonnes and
7.8 mn tonnes, respectively. We maintain our Buy rating on the stock; our target
price is under review
Review by Angle Broking
Although JSW Steel’s crude steel production increased by 10.6% yoy to 1.7 mn
tonnes, production was lower by at least 0.5 mn tonnes on account of shortage of
iron ore.
Despite lower production, standalone net sales grew by 33.5% yoy
to Rs.7,625 cr, in-line with our estimate of Rs.7,607 cr. Net sales growth was driven by
the increase in steel sales volumes (up 18.9% yoy to 1.9mn tonnes) as well as
blended realizations (up 14.6% yoy to Rs.42,831/tonne).
However, EBITDA/tone grew only by 9.9% yoy to Rs.6,887 due to higher raw-material costs. EBITDA
increased by 30.6% yoy to Rs.1,296 cr. The company reported exceptional items
related to forex loss of Rs.513 cr during the quarter. Consequently, net profit
decreased by 71.5% yoy to Rs.127 cr. However, adjusted net profit, excluding
exceptional items, increased by 43.7% yoy to Rs.640 cr (higher than our estimate
of Rs.432cr).
The company has now lowered its production and sales volumes
estimates for FY 2012 and FY 2013 by 14.0% and 13.0% to 7.5 mn tonnes and
7.8 mn tonnes, respectively. We maintain our Buy rating on the stock; our target
price is under review
Review by Angle Broking
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