BENGALURU (Reuters) – Jindal Steel and Power reported a drop in first-quarter profit on Wednesday as a string of higher expenses added to the dent caused by weak steel demand in a quarter that included the general elections.
The steelmaker’s consolidated profit after tax fell 21% to 13.38 billion rupees (around $160 million) in the April-June quarter. Raw material costs surged 22%, leading to a 8% rise in expenses at 117.93 billion rupees, the company said.
KEY CONTEXT
Jindal Steel’s coal mines have helped it offset rising iron ore costs for the past few quarters, while its results also got a lift from buoyant steel demand due to the government’s sustained spending on manufacturing and infrastructure ahead of the general elections.
In April-June however, the general elections, which lasted for nearly half the quarter, led to muted steel demand, analysts said, which was compounded by higher costs of rebar, a key raw material for steelmakers.
Last week, bigger peer JSW Steel reported a bigger-than-expected fall in profit.
PEER COMPARISON
Valuation (next 12 Estimates (next 12 Analysts’ sentiment
months) months)
RIC PE EV/EBITDA Revenue Profit Mean No. of Stock to Div
growth (%) growth rating* analyst price yield
(%) s target** (%)
Jindal Steel 13.25 7.69 15.09 20.44 Buy 24 0.96 0.21
JSW Steel 15.76 8.58 10.74 45.16 Hold 28 0.99 0.82
Tata Steel 12.25 7.59 4.82 133.85 Hold 28 0.97 2.25
Steel Authority of 13.87 7.54 4.45 12.90 Sell 11 1.14 0.87
India
* The mean of analyst ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell ** The ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT
APRIL-JUNE STOCK PERFORMANCE
— All data from LSEG
— $1 = 83.6820 Indian rupees
(Reporting by Manvi Pant in Bengaluru)
