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deveshkayal
Senior Member
Joined: 04/Sep/2006
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Posts: 3903
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   Topic: Jindal Steel & Power: Merchant Power play
Posted: 07/Aug/2009 at 11:55am |
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CMP: 2722
Market Cap: 42233crs
FY09 ROE: 45%
FY09 ROCE: 33.3%
FY09 EPS: 198
Cash EPS: 261
Op.Margin: 48%
Net Profit Margin: 28%
D/E: 1.03
Snapshot - Steel
Operating 3 Million Ton capacity Steel Plant in Central India (Chhattisgarh)
Operating largest Coal Based Sponge Iron Plant in the world (Capacity -1.4 Million ton)
Steel production is expected to double in 2-3 years from existing plant on ramp up.
Snapshot - Power (ROE of 93% in FY09)
Set up 1000 MW Thermal Power Plant in Central India (Chhattisgarh)
The company has captive coal mine and plant is pithead. Company has achieved the highest PLF of 96% in Q1FY10. Net Sales of 1213.53crs, PAT 700crs (Q1FY10).
JPL has announced further brownfield expansion of 2400 MW (4x600 MW) Power Plant at an estimated project cost of Rs. 12,800 Cr. (US $ 2.67 billion). Order for Boiler Turbine & Generator (BTG) package has been placed on BHEL in December 2008. This project will be completed in stages in the year of 2012 and 2013 and the same will be funded on the basis of 75:25 debt : equity. Debt of Rs. 9,600 Cr. will be tied up in due course of time and the equity of Rs. 3,200 Cr. will be arranged from internal accruals.
Two Joint Venture Agreements executed with Hydro Power Development Corporation of Arunachal Pradesh Limited (HPDCAPL) for development of 4500 MW Hydro Projects in Arunachal Pradesh. Detailed Project Report (DPR) and infrastructure development to be completed in 5 years. Setting up of these projects will take about 8 years after preparation of DPR.
Coal & Iron Ore Mines
Extracting 12 MT thermal coal from captive mines.
Largest producer of Coal in private sector.
Operating 6 MT capacity coal washery.
Setting up additional 6 MT capacity coal washery
Coal To Liquid Project:
Government of India allotted RamchandiPromotional Coal Block in the State of Orissa with estimated reserves of 1,500 Million MT.
Production Capacity of 80,000 Barrels per day (4.0 MMTPA.
Total Project Cost : Rs. 42,000 Crores
The above project is aimed at enhancement of energy security by reducing dependence on imported Crude.
Petroleum:
Awarded 4 Oil & Gas Exploration Blocks in Georgia in Jul./Aug. 2008. Many blocks have large nos. of test wells done earlier showing oil. Awarded 1 Block in India under New Exploration Licensing Policy-(NELP -VII) in Rajasthan.
In the last 10 years, Sales and Profit have grown at a CAGR of 40% and 52% respectively. Value will be unlocked from the Power subsidiary's IPO.
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"You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett
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BGKGURU
Senior Member
Joined: 28/Nov/2007
Location: India
Online Status: Offline
Posts: 635
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Posted: 08/Aug/2009 at 12:18pm |
Deveshji
Plz give us future projection.
I have one query more,Since they are in marchant power and now open access policy implement in mumbai so we will see impact of that in whole country.
I belive we will se power shortage always so prices will always higher but i would like to know your view. Can they able to sell at full capacity since they sale at spot market?
I would like to add one more point not fundamenta butimportant point-5:1 bonus.
Roe is so high in power,will they maintain in future. nhpc is coming with ipo have 7% roe,offcource it will go up to 12-15% in due time. ntpc have 19-20% roe so jspl can maintain 93% roe.
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Respect the Markets and do MAKE mistakes, but see to it that you can afford to stay in the markets even after the mistake-RJ
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deveshkayal
Senior Member
Joined: 04/Sep/2006
Online Status: Offline
Posts: 3903
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Posted: 08/Aug/2009 at 1:42pm |
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In Q1FY10, ROE of Power business was more than 100%. ROE of 35-40% is sustainable. Contribution of Power business to the Consolidated PAT will go upto 80% by FY13 so the PE will expand to 12-15 times going forward. JSPL is currently trading at 8.6x FY11earnings (considering Goldman Sachs analysts estimates whose estimates is 30-40% higher than consensus).
Edited by deveshkayal - 08/Aug/2009 at 2:15pm
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"You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett
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DHIRAJKANT
Senior Member
Joined: 23/Sep/2007
Location: India
Online Status: Offline
Posts: 409
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Posted: 08/Aug/2009 at 4:31pm |
devesh ji,
i have 25 jspl @3000. add more or wait 4 lower-level?
regards
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smartcat
Senior Member
Joined: 29/Mar/2007
Location: India
Online Status: Offline
Posts: 4243
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Posted: 08/Aug/2009 at 8:51pm |
I'm beginning to like this company!
JSPL's raw material production: iron ore, coal & fly ash (by-product of power plants)
JSPL's finished goods production: steel, power, petroleum and cement.
The business model of this company is like the LEGO building blocks - everything falls into place when you assemble it.
Set up 1000 MW Thermal Power Plant in Central India (Chhattisgarh)
The company has captive coal mine and plant is pithead. Company has achieved the highest PLF of 96% in Q1FY10. Net Sales of 1213.53crs, PAT 700crs (Q1FY10) |
Here we have a 1000 MW plant generating a possible annual net profit of Rs. 2,400 crores. NTPC barely manages a net profit of Rs. 8,000 cr from 30,000 MW!
However, ALL the "analysts" still use the 'market cap per MW' figure to compare two power companies. Let's see how many years it takes for the analysts to realize that [units produced (depends on MW capacity) x average price per unit] is what one should be looking at.
Looking at only MW capacity instead of the above is like analysing a stock looking at Price per share instead of P/E.
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chimak10
Senior Member
Joined: 30/Aug/2007
Location: India
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Posts: 1540
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Posted: 08/Aug/2009 at 9:08pm |
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Operating margins was lower at ~36% In FY09 as the Company made a provision of Rs.5.9 bn on account of mark-to-market of high cost coking coal.
Now JSPL only has non coking coal at its captive mine. that's what i got from gupta research report
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deveshkayal
Senior Member
Joined: 04/Sep/2006
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Posts: 3903
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Posted: 08/Aug/2009 at 10:48pm |
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If one has to buy Power stocks, forget NHPC, NTPC, Rel Power or any other power company whose project is under development or whatever and buy JSPL. Here is one company which has proven its execution skills. If anyone had bought JSPL in 2003, he would be sitting on a 30 bagger right now. Sunil Singhania of Rel Growth Fund and Sanjiv Duggal made lots of money in JSPL and are still invested !!
The best part about JSPL is that Capex is funded through internal accruals and debt. No equity dilution here.
Edited by deveshkayal - 08/Aug/2009 at 10:51pm
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"You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett
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kumardiwesh
Senior Member
Joined: 26/May/2008
Location: India
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Posts: 721
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Posted: 08/Aug/2009 at 1:21am |
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What is it about JSPL's business model that they do not need to dilute equity.
Power generation is capital-intensive.
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"History does not tell you the probability of future financial things happening" - Warren Buffett
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