ICICI Securities said in a note that it visited Jindal Steel & Power’s (JSPL) Angul plant, which has grown and improved since its first visit in CY09. There are final plans (and adequate land availability) to expand capacity.
The domestic brokerage and research firm said in a note, “While management seeks to build capacity through internal accruals and limit net debt to 1.5x EBITDA at all times, execution is rarely linear as planned. Seems like.” ICICI Securities has upgraded metal stock JSPL will link the hold with the target price 433 per share.
With the introduction of slurry pipeline, JSPL can save ₹1000 per tonne of steel on transportation cost. Further, with the commissioning of Hot Strip Mill (HSM), the management expects to improve the mix and achieve additional EBITDA of Rs.5000/t.
Philip Capital, another brokerage house, also came out positive from the visit and was surprised by the pace of work visible for the next phase of growth. “This also gives us confidence that value addition projects (pellet/HSM) will come up within a year, leading to improved margins,” it said in a note. 570.
“The 6mn-tpa pellet plant is likely to be ready first by September-October 2022 (equipment ordered; civil work is progressing well) while 3mn-tpa HSM may be completed by the end of FY23 (civil Work has started). Both the projects will be margin-enhancing, as there is a mismatch between JSPL’s production and downstream capacity, which HSM can help correct,” said analysts at Philips Capital.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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