Emkay Global Financial's research report on Jindal Stainless
Consolidated EBITDA/PAT were 19%/68% higher than our estimates, driven by a 7% COGS beat. On a sequential basis, revenue/EBITDA/PAT rose 8%/37%/109%, aided by resurgence in demand and turnaround in subsidiary performance. The company repaid Rs5.8bn in Q3 amid strong operational performance. In 9MFY21, JSL repaid Rs9.8bn. Accordingly, the company only has Rs350mn in scheduled repayments in FY22, with enough headroom for new growth capex. JSL is set to embark on raising Jajpur plant capacity from 1.1mt to 1.9mt in 24months from the date of formal announcement at capex of Rs20-30bn. We believe that the expansion comes at the right time when demand for SS in India is poised to grow due to urbanization.
Outlook
We raise our FY21E EBITDA by 10% but keep FY22 estimates relatively unchanged despite a near-term uptick as the government revoked CVD on imports from Indonesia and China in the recent budget, capping potential ASP hikes. Retain Buy with an unchanged TP of Rs95. Dumping from Indonesia and china remains the key risk.
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