Credit Suisse report says JSW Steel understated net debt at end FY12

MUMBAI:A report by foreign brokerage Credit Suisse today said that JSW Steel understated FY12-end net debt by at least Rs 11,900 crore. The company stated debt stood at Rs 16,600 crore at the end of the previous financial year, according to the report.

"We believe net debt was understated by at least Rs119 bn: (1) Acceptances of Rs75 bn (up from Rs68 bn in FY11) are effectively debt; (2) Securitised receivables of Rs31 bn (up from Rs26bn); and (3) Rs12 bn from the fall in INR; un-hedged liabilities are now $3 bn ," said the broker in report released today.

The stock was down by 2.3% at Rs 704 on BSE Friday noon.

"The rise in understated debt compounds our concerns on steel oversupply in India, esp. as we value JSW on EV/EBITDA, and higher debt takes away from market cap. Rs119 bn debt understatement is considerable given market cap’s only Rs161 bn," said the report.