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JSW Steel - Q2FY21 Result Update - ICICI Securities

Posted On: 2020-10-26 06:32:42 (Time Zone: Arizona, USA)


JSW Steel reported a healthy set of Q2FY21 numbers wherein topline, EBITDA and PAT came in higher than our estimate. On a standalone basis, the company reported sales volume of 4.12 million tonnes (MT) (vs. our estimate of 4.0 MT). As domestic steel demand rebounded from recent lows and gained momentum, JSW Steel reduced the share of exports in its overall volume-mix. In Q2FY21, exports as a percentage of total sales fell to 28% vs. 57% in Q1FY21. Consolidated topline came in at Rs. 19264 crore (up 13% YoY, 64% QoQ), higher than our estimate of Rs. 18331 crore. Topline came in higher than our estimate on the back of better-than-expected realisations. Consolidated EBITDA came in at Rs. 4414 crore (up 95% YoY, 229% QoQ), higher than our estimate of Rs. 3525 crore. Consolidated EBITDA margin came in at 22.9% (up 1150 bps QoQ, 970 bps YoY), higher than our estimate of 19.2%. Healthy EBITDA margins were on account of lower price of imported coal, better operating leverage and savings in procurement costs, fixed overheads. However, this benefit was partially offset by increase in iron ore prices. Ensuing consolidated PAT for Q2FY21 was at Rs. 1595 crore, higher than our estimate of Rs. 1085 crore.

Valuation & Outlook

JSW Steel's blended realisations increased ~11%, thereby aiding healthy performance for the quarter. On the back of strength in steel prices, we expect the good performance to continue. Going forward, we model EBITDA margin of 19.4% for FY21E and 20.2% for FY22E. We value the stock on an SoTP basis, thereby arriving at a target price of Rs. 330. We have a HOLD rating on the stock.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_JSWSteel_Q2FY21.pdf

Shares of JSW STEEL LTD. was last trading in BSE at Rs.308.15 as compared to the previous close of Rs. 321.05. The total number of shares traded during the day was 367807 in over 5143 trades.

The stock hit an intraday high of Rs. 318.7 and intraday low of 304.4. The net turnover during the day was Rs. 113624218.


Source: Equity Bulls

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