- 18 Oct 2024
- ICICI Securities
JINDAL STAINLESS LTD Q2FY25 RESULTS
News: Total operating income on consolidated basis for Q2FY25 came in at ₹9,777 crore (flat YoY, up 4% QoQ) with stainless steel sales volume at 5.65 lakh tons, up by 4% YoY and down 2% QoQ. EBITDA for the quarter came in at ₹1,186 crore with corresponding EBITDA margins at 12.1% (down 50 bps YoY, 70 bps QoQ). EBITDA/tonne on standalone basis came in at ₹17,833/tonne in Q2FY25 vs. ₹17,368/tonne in Q1FY25 vs. ₹19,664/tonne in Q2FY24. Consolidated PAT for the quarter stood at ₹609 crore (down 20% YoY, 6% QoQ).
Views: Decline in sales volume was driven by sluggish export market, which contributed only 10% to the overall sales mix this quarter. Additionally, increased imports of stainless steel from China and Vietnam have negatively affected the overall volume growth in the domestic market. Despite this, the company was able to maintain EBITDA/tonne above ₹17,000/tonne mark due to lower operating cost. From a long-term perspective, we remain optimistic given the inherent benefits of stainless steel such as low maintenance, and low life cycle cost, as well as healthy demand prospects in infrastructure and consumer durable, and significant capacity expansion in pipeline. On the valuation front however, it trades expensive (at >~10x EV/EBITDA on FY26E) which will limit the stock price appreciation in our view.
Impact: Negative