Jindal Steel & Power’s Q4 one-time cost hit, but outlook upbeat

JSPL reports 8% sequential decline in EBITDA 2,187 crore, was impacted by an inventory write-down of Rs. 250 crores. Higher iron ore prices also affected profitability. Ebitda margin stood at approximately 16%, reflecting a sequential decline of 312 basis points. JSPL has said that the company will remain vigilant with its inventory and fixed assets even though such one-time costs may not be sustained in the near to medium term.

Going forward, a number of factors are expected to drive margin performance. Notably, the recent fall in coking coal prices should prove beneficial for JSPL’s margins. Analysts at JM Financial Institutional Securities emphasized that the upcoming mining approvals should also lead to margin expansion. “The company’s coal security is expected to improve following the commissioning of coal blocks – Utkal C, Utkal B1, B2 and Gare Palma IV/6,” the broking firm said in a report on May 16.

In line with its capex plans, JSPL does not expect any incremental burden on its balance sheet. “We believe that future cash flows will be sufficient to fund ongoing capex of approx. “Rs 15,000 crore spread over FY24E-27E,” analysts at Nuwama Research said in a report on May 16. added the broking firm. JSPL’s net debt to EBITDA ratio stood at 0.7 times at the end of FY23.

JSPL refrained from providing guidance for FY24 volumes, but expects strong demand in the domestic market. The company expects increased government spending to stimulate demand, which if realised, would provide a significant boost to volumes, thereby boosting investor sentiment. Despite these potential growth levers, JSPL shares are down 13% from their 52-week high 622.75 per share was seen in February.