JSW Steel Q2 Review - Results Below Estimates; Strong Performance By Subsidiaries: Systematix

"BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Systematix Report.JSW Steel Ltd.'s Q2 FY22 consolidated Ebitda of Rs 104.2 billion (+136% YoY, +1.4% QoQ) was 7% below our estimates. Standalone business reported lower-than-expected steel sales volumes and lower margins, though partially offset by strong performance by subsidiaries. Raw material costs increased 68% YoY ($193/t) and 12% QoQ ($51/t). As a result, Ebitda margins declined to $309/t (vs. highest-ever Ebitda margin of $359/t in the previous quarter since Q2 FY09). JSW increased its stake to 83% in Bhushan Power (BPSL), which reported Q2 FY22 Ebitda of Rs 20 billion. BPSL’s acquisition cost at Rs 190 billion appears significantly value accretive at 2.4x EV/Ebitda based on annualised Q2 FY22 EBITDA; it is also increasing its capacity to 5mtpa at a marginal cost of Rs 35 billion by FY24. The 5 mtpa expansion at Dolvi in Oct. 2021, which comprises one of India’s largest blast furnaces, would have a lower cost structure. We raise our FY22/23E Ebitda by 8%/22% largely driven by the consolidation of BPSL even as we raise our raw material cost assumptions..Click on the attachment to read the full report:.DISCLAIMERThis report is authored by an external party. BloombergQuint does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BloombergQuint..Users have no license to copy, modify, or distribute the content without permission of the Original Owner."

JSW Steel Q2 Review - Results Below Estimates; Strong Performance By Subsidiaries: Systematix