Macquarie maintains 'Outperform' rating on Jindal Steel & Power
Macquarie maintains the `Outperform’ rating on Jindal Steel & Power by increasing the target price to Rs 2,571 from Rs 2,104 to reflect the increased earnings and also the transition to FY10E.
By ET Bureau |
Jindal Steel & Power
RESEARCH: MACQUARIE
RATING: OUTPERFORM
CMP: Rs 2092.40
Macquarie maintains the `Outperform��� rating on Jindal Steel & Power by increasing the target price to Rs 2,571 from Rs 2,104 to reflect the increased earnings and also the transition to FY10E. JSPL reported FY09 results, which beat the full year estimates by 10%, driven by strong profitability from its merchant power division and in spite of large provisioning. Net sales at Rs 1760 crore is up 16% y-o-y driven by better volumes and product mix. The adjusted operating margin is at 46% against the reported 25%. Net profit at Rs 360 crore is down just 8%, helped by the sharp drop in net interest costs. Macquarie has upgraded the earnings estimates for FY10, FY11 and FY12 by 10%, 2% and 19%, respectively, driven by better profitability in the steel business. JSPL remains Macquarie���s preferred pick due to its domestic-focussed business. Its increased exposure to stable earnings from the power generation business makes a strong case for re-rating . In fact, its unsung steel business, with is predominantly long steel products, is also well placed to capture the buoyant construction demand.
RESEARCH: MACQUARIE
RATING: OUTPERFORM
CMP: Rs 2092.40
Macquarie maintains the `Outperform��� rating on Jindal Steel & Power by increasing the target price to Rs 2,571 from Rs 2,104 to reflect the increased earnings and also the transition to FY10E. JSPL reported FY09 results, which beat the full year estimates by 10%, driven by strong profitability from its merchant power division and in spite of large provisioning. Net sales at Rs 1760 crore is up 16% y-o-y driven by better volumes and product mix. The adjusted operating margin is at 46% against the reported 25%. Net profit at Rs 360 crore is down just 8%, helped by the sharp drop in net interest costs. Macquarie has upgraded the earnings estimates for FY10, FY11 and FY12 by 10%, 2% and 19%, respectively, driven by better profitability in the steel business. JSPL remains Macquarie���s preferred pick due to its domestic-focussed business. Its increased exposure to stable earnings from the power generation business makes a strong case for re-rating . In fact, its unsung steel business, with is predominantly long steel products, is also well placed to capture the buoyant construction demand.
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