CLSA downgrades Jindal Steel & Power to underperform
CLSA downgraded Jindal Steel & Power on concerns of project execution delays, rising policy risks on captive coal mines and uncertainty over iron ore contract.
By ET Online | Updated:
MUMBAI: CLSA downgraded Jindal Steel & Power on concerns of project execution delays, rising policy risks on captive coal mines and uncertainty over its iron ore contract with Sarda Mines.
The brokerage cut FY13-14 EPS by 4-5 per cent and downgraded the stock to 'underperform' from 'outperform' with a target price of Rs 425 per share.
"JSPL's Angul steel plant continues to see delays and we are doubtful that commissioning will happen by end-FY13. We now assume it to be commissioned by October 2013 (c.f. April 2013 earlier). The mining lease for the Utkal-B1 coal block has still not come through and JSPL is not likely to commission Angul steel and power capacities till the Utkal coal is available," the report said.
"We are now valuing only 3.4GW power capacity for Jindal Power given the lack of progress on the pipeline projects. JSPL's multiples remain impacted by project execution concerns, rising policy risks on its captive coal mines/merchant power sales and recent question marks on its iron ore contract with Sarda Mines – issues which might not get resolved soon," it added.
The stock was at Rs 422, up 0.75 per cent on the BSE. It has touched a high of Rs 425 and a low of Rs 420 today.
The brokerage cut FY13-14 EPS by 4-5 per cent and downgraded the stock to 'underperform' from 'outperform' with a target price of Rs 425 per share.
"JSPL's Angul steel plant continues to see delays and we are doubtful that commissioning will happen by end-FY13. We now assume it to be commissioned by October 2013 (c.f. April 2013 earlier). The mining lease for the Utkal-B1 coal block has still not come through and JSPL is not likely to commission Angul steel and power capacities till the Utkal coal is available," the report said.
"We are now valuing only 3.4GW power capacity for Jindal Power given the lack of progress on the pipeline projects. JSPL's multiples remain impacted by project execution concerns, rising policy risks on its captive coal mines/merchant power sales and recent question marks on its iron ore contract with Sarda Mines – issues which might not get resolved soon," it added.
The stock was at Rs 422, up 0.75 per cent on the BSE. It has touched a high of Rs 425 and a low of Rs 420 today.
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