Jindal Steel & Power (JSPL) reported Q2FY15 results

Jindal Steel & Power (JSPL) faced sevaral unfavourable developments during Q2FY15 including de-allocation of its coal mines, reduced demand for steel due to heavy congestion in ports and non – availability of rail transport out of ports. However, JSPL grew its consolidated Q2 turnover by 6 per cent on yearly basis. EBITDA in Q2FY14 at consolidated levels also increased by 10 per cent compared to same quarter previous year. Further, the EBITDA margins increased from 30 per cent in Q2FY14 to 32 per cent in Q2FY15.

On the business-wise, the steel business on standalone basis declined by 9 per cent due to a major up gradation program of its Raigarh plant which was successfully completed by the end of September 2014. However, EBITDA level in Q2 increased from 28 per cent in FY14 to 34 per cent in FY15. PAT and cash profit during Q2 increased by 12 per cent and 62 per cent respectively. The Raigarh steel unit increased its capacity to 3.6 MTPA compared to the previous 3.0 MTPA, coal gasification plant and DRI units also archived new highs in their performance. Although the company encountered major challenge in sourcing coal for CGP plant due to non-availability of its own local source, the plant achieved a capacity utilization level of 60 per cent.

Jindal power also faced similar problem of non-availability of coal for Tamnar Phase II units. However, its Q2 sales and EBITDA grow by 39 per cent and 21 per cent respectively compared to the same quarter last year. Three out of four units are already commissioned while fourth unit would be commissioned before the end of current fiscal year. On global operations front, JSPL’s Oman unit is also performing well consistently. The Q2FY15 turnover and PAT increased by 32 and 104 per cent respectively on yearly basis.

On bottomline front, due to 53 per cent increase in burden of interest and depreciation, the PAT for Q2FY15 was lower by 12 per cent. The company’s cash profit increased from Rs 907 crore in Q2FY14 to Rs 1308 crore in Q2FY15 a net increase of 44 per cent. JSPL’s consolidated turnover and EBITDA during H1 also increased by 6 and 18 per cent respectively compared to the same period of the previous year.

However, JSPL’s shareholding pattern shows reduction in the institutional holding in September quarter to 25.91 per cent from 27.15 per cent in June quarter. We are also of the opinion that investor should wait for the next quarter to take exposure in this stock considering its last three months stock movement. The JSPL’s stock price has corrected almost by 27 per cent since August 2014.