JSPL’s Q4 Ebitda beat CSe (+8%), driven by its steel businesses.

JSPL’s Q4 Ebitda beat CSe (+8%), driven by its steel businesses. JSPL performed better than expected while global mining operations remained a drag. Below Ebitda, depreciation was lower due to adjustments in its Australian mining subsidiary. Beat in standalone was largely driven by lower costs, likely due to usage of SMPL ore.

JSPL has guided for 7mt steel volumes in FY21 (CSe 6.7mt sales). Despite industry production falling y-o-y in April, JSPL’s was +5% y-o-y. It continues to rely on exports, and hence has guided for blended Ebitda to be ~$20/t lower due to weaker realisations.

Increased coal availability helped JPL maintain margins q-o-q despite lower realisations; the company expects to participate in upcoming block auctions and sign PPAs with JK and JH by end-Q1. It expects the power business to be PAT positive by end-FY21.

FY21 capex to be ~Rs 7 bn (largely maintenance); Rs 61 bn repayments are due in FY21. While net debt rose Rs 5 bn q-o-q, it was due to forex impact and inventory build-up. JSPL continues to be on de-leveraging path ( Rs 32 bn in FY20) and also benefits from favourable positioning of longs. Maintain Outperform with an unchanged TP of Rs 175.