Prabhudas Lilladher is bullish on Jindal Steel & Power and has recommended buy rating on the stock with a target of Rs 370 in its August 08, 2014 research report.
"Jindal Steel and Power (JSPL), revenue fell 3.9% QoQ to Rs35.2bn, above our expectation of Rs34bn on account of higher than expected volumes (737kt v/s PLe:698kt) and better realisations. The significant beat came on the cost front. Total cost/t fell 8.5% QoQ against our expectation of 1% increase. The variance was driven by lower raw material and stores and spares cost. This led EBITDA to rise 19% QoQ/39% YoY to Rs11.3bn, way ahead of our expectation of Rs9bn. Thanks to strong EBITDA growth, PAT grew 28% YoY to Rs3.1bn (PLe; Rs1.8bn) despite steep increase in depreciation and interest cost. Led by strong show in domestic and Oman based HBI plant, consolidated grew 19% QoQ/21% YoY to Rs15.2bn, ahead of our expectation of Rs13.2bn. Oman operations posted 47% YoY growth in EBITDA at US$22m (PLe:US$19m). While, company reported a loss of US$5m in Mozambique coal operations. Consol PAT fell 15% YoY to Rs4.2bn (PLe: Rs3.5bn) due to steep increase in depreciation and interest cost, attributed to capitalisation of 3X600MW power plant in JPL, 2X135MW CPP, SMS in Oman and consolidation of loss making Australian based subsidiary."
"The company reported Q1FY15 earnings above our expectation on account of better than expected earnings in steel business. Driven by front-loaded capacity expansion, strong free cash generation and attractive valuations, we maintain our 'BUY' rating with TP of Rs370, EV/EBITDA of 7.0x FY16E," says Prabhudas Lilladher research report.
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