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Jindal Steel and Power : EBITDA/ton came in below expectation; capacities ramp up along with recovery in steel prices to boost profitability starting next quarter

ICICIdirect Research 02 May 2025 DISCLAIMER

Revenue for the quarter grew healthy by 12% QoQ to ₹13,183 crore with steel sales volume of 2.1 million tonne, up by 12% QoQ.

This was driven by higher capacity utilisation (88% in Q4FY25 vs 83% in Q3FY25) and inventory liquidation. While the average blended realization was flat QoQ to ~₹61,893/ton. 

Consolidated EBITDA for Q4FY25 stood at ₹2,271 crore with EBITDA/tonne at ₹10,661/tonne, down by ~₹830/tonne by QoQ owing to one-time non-recurring expenses of ₹213 crores in the quarter.

Excluding this one-off expense, EBITDA/tonne has increase by ~₹250/tonne QoQ to ~₹11,750/tonne in the quarter.

Consequently, adjusting for one time impairment charge for its foreign assets, consolidated PAT for the quarter was at ₹935 crores, (down 2% QoQ). 

Going ahead, with new capacities in place, recovery in domestic steel prices (domestic HRC prices up ~₹6,000/ton at ~₹53,000/ton vs. a low of ₹ 47,000/ton), along with lower raw material prices (expected $10 to $15 per ton coking coal decline in Q1FY26), we expect margins to expand from Q1FY26 onwards.

Thus, we maintain a positive view on the company, given its strategic capacity expansion, favourable steel demand domestically, healthy backward integration and controlled leverage on B/S.

We reiterate BUY rating on JSPL with a revised target price of ₹1,100 at 8.5x on FY27E EV/EBITDA

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