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Q3FY21 Result Update - JSW Steel - ICICI Direct

Posted On: 2021-01-27 09:00:57 (Time Zone: Arizona, USA)

JSW Steel reported a healthy set of Q3FY21 numbers wherein topline, EBITDA and PAT came in higher than our estimate. On a standalone basis, the company reported sales volume of 3.9 million tonnes (MT) (down 3% YoY, 5% YoY), broadly in line with our estimate of 4.0 MT. Standalone EBITDA/tonne came in at Rs. 14444/tonne, higher than our estimate of Rs. 13000/tonne (Rs. 10136/tonne in Q2FY21, Rs. 5598/tonne in Q3FY20). Consolidated topline came in at Rs. 21859 crore (up 13% QoQ, 21% YoY), higher than our estimate of Rs. 20857 crore. Consolidated EBITDA came in at Rs. 5946 crore (up 143% YoY, 35% QoQ), higher than our estimate of Rs. 5269 crore. Consolidated EBITDA margin came in at 27.2% vs. 13.6% in Q3FY20 and 22.9% in Q2FY21 (our estimate of 25.3%). Ensuing consolidated PAT was at Rs. 2669 crore against our estimate of Rs. 2441 crore (consolidated PAT of Rs. 1595 crore in Q2FY21 and Rs. 187 crore in Q3FY20).

Valuation & Outlook

JSW Steel's expansion project at Dolvi from 5 million tonnes per annum (MTPA) to 10 MTPA steelmaking capacity is nearing completion, with majority of operations to be commissioned in Q4FY21. Full integrated operations and stabilisation will take place in Q1FY22. This is expected to lead to volume growth in FY22 and beyond. We introduce FY23E estimates and roll over our valuations to FY23E. We model sales volume of 15 MT in FY21E, 18 MT in FY22E and 20 MT in FY23E. We value the stock at 6x FY23E EV/EBITDA and arrive at a target price of Rs. 400, maintaining our HOLD recommendation on the stock (earlier target price of Rs. 330).

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Shares of JSW STEEL LTD. was last trading in BSE at Rs.376.4 as compared to the previous close of Rs. 382.35. The total number of shares traded during the day was 356344 in over 4478 trades.

The stock hit an intraday high of Rs. 383.4 and intraday low of 371.65. The net turnover during the day was Rs. 134705453.

Source: Equity Bulls

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