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Q4 Result Update: Jindal Stainless Hisar Ltd - BUY - TP Rs.318 - Kotak

Posted On: 2018-05-05 08:24:49

JSHL's Q4FY18 standalone numbers were below our estimates, due to lower than expected realisation. The volume during the quarter continues to remain strong. FY18 consolidated PAT doubled to Rs5.91 bn, supported by strong performance in standalone operations and improved performance from Jindal Stainless Steelway (JSSL) and Jindal Lifestyle (JLL).

- Given the strong steel demand, the stainless steel sales volume during the quarter grew 8.7% YoY to 188,922 tonnes. Realization stood at Rs119,295/tonne, up 1.4% YoY.

- EBITDA/T during the quarter increased by 10.6% YoY to Rs15,151/tonne (down 12% QoQ). The sequential decline in EBITDA/T is due to lower realisation. Subsidiaries performance improved substantially during the quarter, with JLL EBITDA increasing by 266% in FY18 and JSSL EBITDA registering 37% growth in FY18.

- The management focus will be on improving operating efficiency, higher utilisation of cold rolling facility and higher penetration in Specialty products. The revenue growth is likely to remain modest going ahead, in our view.

- On the back of strong volume and better than expected JSL and JLL performance, we have revised our earnings estimate higher for FY19E and FY20E to Rs21.5 (earlier Rs18.3) and Rs24.5 (earlier Rs19.2), respectively. Going ahead, we believe, an increasing share of Cold Rolled (JSHL's focus) in the overall product mix, will help the EBITDA to grow at a CAGR of 9% during the FY18-FY20E period, with EBITDA margin in the range of 12-12.5%. Besides these, the strong performance of subsidiaries will also be a potential growth driver. We continue to maintain our BUY rating, with an unchanged target price of Rs318.

Shares of Jindal Stainless (Hisar) Ltd was last trading in BSE at Rs.179.55 as compared to the previous close of Rs. 179.2. The total number of shares traded during the day was 71217 in over 841 trades.

The stock hit an intraday high of Rs. 183.3 and intraday low of 177.7. The net turnover during the day was Rs. 12843836.


Source: Equity Bulls

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