Jindal Steel shares skid 5% on weak Q4 results; here’s what brokerages say

Shares of Jindal Steel & Power Ltd declined as much as 5.2% to hit an intraday low of ₹530.50 on the BSE, a day after the company reported a 79% drop in its net profit at ₹465.66 crore for the March quarter as against ₹2,206.97 crore in the same period last year.

On Wednesday, shares of Jindal Steel opened lower at ₹548.85 crore as against the closing price of the previous session at ₹560.20, in line with the broader benchmark BSE Sensex. During the session, the company’s market capitalisation stood at ₹54,227 crore with 1,07,646 shares exchanging hands on the BSE against the two-week average of 0.5 lakh shares. The stock price of Jindal Steel is trading at 14.6% lower than the company's 52-week high of ₹622.40, which it touched on February 1 this year. The company's shares are trading 74.3% higher than the 52-week low of ₹304.20, which it touched on June 22, last year.

In the March quarter, the company's revenue from operations (net sales) declined by 4.51% YoY to ₹13,691 crore, as against ₹14,339.49 crore in the March quarter last year. During the quarter under review, the company's EBITDA (earnings before income, tax, depreciation and amortization) plunged 28.3% to ₹2,203.04 crore as against ₹3,07.62 crore in the same period last year.

On a sequential basis, the company's profit declined by 10.1% quarter-on-quarter as against ₹518.27 crore in the December quarter. The company's revenue has, however, surged 9.9% QoQ as against ₹12,452 crore in the December quarter.

For FY23, production stood at 7.89 million tonnes compared to 8.01 mt in FY22. Total sales (incl. pig iron) stood at 7.68 mt compared to 7.64 mt in FY22, despite the imposition of export duty on steel exports which led to a decline of 60% in exports volume to 0.99 mt compared to 2.51 mt in FY22. The company has further reduced its net debt by ₹1,923 crore during the year. The company has recommended a final dividend of ₹2 per equity share for FY23.

Analysts at ICICI Securities have maintained a 'BUY' rating for Jindal Steel stocks, with an unchanged target price of ₹750. "We expect cost-efficiencies from the commissioning of 6mtpa pellet plant and slurry pipeline, and progressive operationalisation of coal blocks, to aid profitability. Besides, we expect better balancing of upstream and downstream facilities upon commissioning of hot strip mill (HSM) and slab-caster at Angul," ICICI Securities said in a note.

"We perceive JSPL to be on the right track with upcoming cost-efficiencies helping it in a tough macro-environment of subdued steel prices. The balance sheet has enough headroom for the company to complete the ongoing capex at Angul. We value JSPL at 6x FY25E EBITDA resulting in a target price of Rs750/share," it added.

Kotak Institutional Equities has maintained a 'BUY' rating for the company's stock with a target price of ₹580. Nuvama has maintained a 'BUY' rating with a revised target price of ₹737.

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