Jindal Steel & Power Shares Fall 3% as Q4 Profit Falls 79%

Jindal Steel shares traded below Rs 550 in Q4, but price target suggests upside potential of up to 39%.

Jindal Steel & Power’s shares fell more than 3% on May 17, reacting to poor March quarter FY23 earnings. The steelmaker’s fourth-quarter consolidated net profit fell 79% to Rs 465.66 crore due to higher charges. Revenue fell 4.5% year-on-year to Rs 13,691.93 crore.

The company’s operating margin also contracted to 15.97% in the quarter from 21.41% a year ago.

Shares of the company were trading at Rs 546.15 at 10:01 am, down Rs 14.20, or 2.5%.

According to Morgan Stanley, operating expenses resulted in a significant miss in terms of EBITDA. EBITDA fell 29% year-on-year to Rs 2,187.28 crore. The brokerage said that better realisation partially offsets much lower EBITDA due to higher operating expenses.

Morgan Stanley has an “underweight” rating on the stock with a target price of Rs 460. Meanwhile, Macquarie has a “neutral” rating on Jindal Steel & Power shares with a target price of Rs 557.

Also, JSPL said it has reduced its net debt by Rs 1,923 crore in FY23 to a consolidated net debt of Rs 6,953 crore as on March 31, 2023.

However, Nuvama Institutional Equities expects weaker near-term earnings due to lower volumes and prices, partially offset by softer raw material costs. Despite a slight delay in the commissioning of its factories, most of which are expected within FY24, it noted and retained its “buy” call on the stock with a target price of Rs 737, up from Rs 688 previously.

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