Prices of coking coal, a key input for making steel, have almost doubled over the last one year, but there’s no sweat on Vikram Gujral’s brow. Sure, the Vice Chairman and CEO of Jindal Steel and Power (JSPL) has been able to increase steel prices by around 35 per cent.
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2. An Integrated Play: Prices of coking coal, a key input for making steel, have almost doubled over the last one year, but there's no sweat on Vikram Gujral's brow. Sure, the Vice Chairman and CEO of Jindal Steel and Power (JSPL) has been able to increase steel prices by around 35 per cent, but that's not the reason why he's in clover. Rather, JSPL has what not too many steel makers in the industry have: the advantage of having its own iron ore mines and a merchant power plant...
Prices
of coking coal, a key input for making steel, have almost doubled over
the last one year, but there’s no sweat on Vikram Gujral’s brow. Sure,
the Vice Chairman and CEO of Jindal Steel and Power (JSPL) has been
able to increase steel prices by around 35 per cent, but that’s not the
reason why he’s in clover. Rather, JSPL has what not too many steel
makers in the industry have: the advantage of having its own iron ore
mines and a merchant power plant. In fact, “JSPL is the only Indian
player with a unique blend of steel and merchant power business,” says
Tarang Bhanushali, Research Analyst, India Infoline. “It has superior
technological capabilities and impressive execution record.”
Don’t
take Bhanushali for his word. Take a look at JSPL’s numbers. In
2007-08, the Delhi-headquartered company upped its net profits by 75.96
per cent to Rs 1,236.96 crore and revenue by 53.72 per cent to Rs
5,410.75 crore. In the quarter ended June 30, 2008, it racked up a net
profit of Rs 402.30 crore, compared to Rs 250.11 crore for the
corresponding quarter last year. Total income jumped to Rs 1,902.74
crore, compared to Rs 1,232.73 crore for the same quarter a year ago.
Given
a market place that’s chronically power starved and yet in growth mode,
JSPL plans to ramp up capacity. In another 12 years, it hopes to have
an annual steel capacity of over 30 million tonnes from 2.9 MT at
present, and power generating capacity of 6,160 MW (1,000 MW
currently). Says Gujral: “Given the emphasis on infrastructure
development, the demand for steel will increase, especially for roads,
bridges and housing.” Evidently, investors agree with his assessment.
The 33 per cent drop in JSPL’S stocks closely tracks the 31 per cent
correction in Sensex over the last seven months.
Joined: 30/Aug/2007
Location: India
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Posts: 1540
Posted: 09/Aug/2009 at 5:38pm
About GMR power plant
GEL, the 220 MW power plant situated at Tanir Bavi, Mangalore, Karnataka, commenced generation of power on 7th June 2001 and supplied power to Govt. of Karnataka till 6th June 2008 as per the Power Purchase Agreement (PPA). The Power plant was non-operational after the expiry of PPA.
Joined: 06/Feb/2009
Location: India
Online Status: Offline
Posts: 1868
Posted: 09/Aug/2009 at 7:59pm
Hiteshji,
GujNRE coke is a nice play on shortage of coke in India..they have been executing their plans well but current downturn has spoiled everything.. i sold it before eventual crash..business is solid but promoters are very sensitive to their stock movements and so it remains very volatile..it will jump sharply once durable recovery starts..the biggest fundamental change has been China which was exporter of Coke till last yr has turned net importer..these guys have hedged their raw matl cost by owning coal mines in Australia...
‘The market always does what it’s supposed to — BUT NEVER WHEN’.
It is worth noting that when most private sector utilities are struggling to achieve project milestones, JSPL is actually running ahead of schedule. This is our view, underlines the management's strong execution skills.
JSPL manufactures steel partly from sponge iron (DRI) and partly from pig iron. Most of the large players in India, on the other hand, use the blast-furnace (BF) route. JSPL enjoys a cost advantage of ~15% over its competitors that use the BF route to manufacture steel.
JSPL steel EBIDTA margin has remained stable and is one of the highest in the industry, despite volatility in underlying steel prices.
"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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Prices
of coking coal, a key input for making steel, have almost doubled over
the last one year, but there’s no sweat on Vikram Gujral’s brow. Sure,
the Vice Chairman and CEO of Jindal Steel and Power (JSPL) has been
able to increase steel prices by around 35 per cent, but that’s not the
reason why he’s in clover. Rather, JSPL has what not too many steel
makers in the industry have: the advantage of having its own iron ore
mines and a merchant power plant. In fact, “JSPL is the only Indian
player with a unique blend of steel and merchant power business,” says
Tarang Bhanushali, Research Analyst, India Infoline. “It has superior
technological capabilities and impressive execution record.”
