Jindal Steel and Power shares plunge 8% post-Q2 results

Shares of Jindal Steel and Power Ltd. (JSPL) traded with a sharp cut on Wednesday, November 1, a day after the company released its September quarter (Q2FY24) numbers.

The stock, at the time of filing this report, was down 7.5 per cent at Rs 586.6 on the BSE. At the day’s low, the stock hit the level of Rs 584.15.

During the Q2FY24 period, the company reported a profit after tax (PAT) of Rs 1,390 crore, up 534 per cent year-on-year (YoY); however, its consolidated net income slipped 9.2 per cent YoY to Rs 12,282 crore. The figure was Rs 13,522 crore in the corresponding quarter of the previous year.

“Strong performance was driven by a sharp reduction in costs, which offset a seasonally weak pricing environment during the quarter,” the company’s press release said.

Consolidated EBITDA adjusted for one-off forex gains of Rs 73 crore during the quarter is placed at Rs 2,213 crore.

Net debt at the company increased sequentially from Rs 6,812 crore in the June quarter to Rs 7,313 crore as of the last quarter. Meanwhile, the total capex for the quarter was Rs 1,836 crore, largely driven by the expansion projects in India.

What do brokerages suggest for JSPL stock post-Q2 results?

Global brokerage house Morgan Stanley has maintained an underweight call on Jindal Steel with a target price of Rs 500. The brokerage pointed out that the steel company missed on the EBITDA front on the back of lower realisations. Further, it expects the company to face continued margin pressure in 3QFY24 given the rise in raw material prices.

Citi has sharply downgraded JSPL stock and accorded it a ‘Sell’ rating from the earlier ‘Buy’ call. It has also reduced the target price substantially to Rs 560 from Rs 810.

Macquarie, on the other hand, has maintained an outperform rating with a revised lower target of Rs 772 per share.