Consolidated Ebitda for JSW Steel Ltd (JSTL)stood at Rs 24 a share, in line with our and Street estimates. Crude steel production, at 3.2mt, was up c16% y-o-y on pro-forma basis (adjusted for a scheme of amalgamation) amid tepid consumption growth in India as a third of production was channelled into export markets.
In our 17 January report, we had highlighted that exports from India have grown c15% y-o-y between Apr-November 13 largely following rupee depreciation. The quantum of JSTL’s exports accounted for almost 60% of exports out of India during the last quarter.
Net income, at Rs 460 crore came marginally below estimates as effective tax rate stood at c45%. Subsidiaries’ operating performance was broadly in line with expectations.On the conference call, JSTL mentioned that it has accelerated capital spending in FY14e although the quantum of capex over the next three years remains constant. JSTL also mentioned that cost of iron ore in Karnataka auction market has risen in Q3FY14, and has been increasing post December 13 as well.
We stay ‘underweight’ on JSTL with an unchanged target price of Rs 950 per share. Our target implies a potential return of 5% (including forecast dividend yield of c1%).