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April 1, 2013Jindal Steel and Power Ltd.
- Jindal Steel and Power Limited (JINDALSTEL) is one of India’s major steel producers
- Company has significant presence in sectors like Mining, Power Generation and Infrastructure
- Annual turnover of over US $2.9 billion
- JSPL is a part of US $ 15 billion diversified O. P. Jindal Group
- The company has committed investments exceeding US$ 30 billion in the future
- Several business initiatives running simultaneously across continents
- Headed by Mr. Naveen Jindal who is currently the Chairman and Managing Director.
Jindal Steel and Power Ltd. Business
The company produces economical and efficient steel and power through backward integration from its captive coal and iron-ore mines. Company has the distinction of producing the world’s longest 121 meter rails and introducing large size parallel flange beams in India. JSPL operates the largest coal – based sponge iron plant in the world and has an installed capacity of 3 MTPA of steel at Raigarh in Chhattisgarh. It has an operating workforce of about 15, 000.
Read about List Of Top Steel Companies in India.
Jindal Steel and Power Ltd. Products
The major products it produces are rails, parallel flange beams, wire rods, TMT bars, power, ferro chrome, sponge iron, semi-finished products, silico manganese, medium and light structural mills and plates and coils.
Expansion Projects
Chhattisgarh
Establishing a 7 MTPA steel plant in phases, a 2 MTPA cement plant and a 1600 MW captive power plant with a total investment of over US $ 6 billion.
Jharkhand
An 11 MTPA integrated steel plant and a 2600 MW captive power plant in phases, with a total investment of US $ 9 billion (` 45,000 Crore). The first phase comprising a 3 MTPA steel plant at Patratu near Ranchi is expected to be commissioned by 2012.
Odisha
A 12.5 MTPA integrated steel plant and 2600 MW captive power plant in phases, with a total investment of US $ 10 billion (` 50,000 Crore). The company is investing close to ` 45,000 Crore (US$ 10 billion) in a Coal to Liquid project in Odisha.
Read on GWI Steel Pipe Manufacturers in India – Welspun,Man,Jindal Saw Expanding into Foreign Shores.
Jindal Steel and Power Ltd. Financials
| Mar-12 | Mar-11 | Mar-10 | Mar-09 | |
| Price Earning (P/E) | 24.18 | 31.68 | 44.33 | 12.1 |
| Price to Book Value ( P/BV) | 4.7 | 7.51 | 9.73 | 3.45 |
| EV/EBIDTA | 14.7 | 19.74 | 26.79 | 8.6 |
- Company has a high beta of 1.6
- Currently due to the huge profit booking the company’s stock has not performed well recently. In the coming year it is expected to see the level as high as 600, which is currently trading at 429 (Jan 16, 2013)
- Also the ongoing case of Zee and JSPL is a negative sign for the company’s stock.
| Mar-12 | Mar-11 | Mar-10 | Mar-09 | |
| Key Ratios | ||||
| Debt-Equity Ratio | 1.42 | 1.33 | 1.1 | 0.97 |
| Long Term Debt-Equity Ratio | 0.8 | 0.9 | 0.93 | 0.91 |
| Current Ratio | 0.67 | 0.77 | 1 | 1.25 |
| Turnover Ratios | ||||
| Fixed Assets | 1.05 | 0.97 | 0.98 | 1.27 |
| Inventory | 5.61 | 5.92 | 6.21 | 7.72 |
| ROCE (%) | 15.39 | 17.9 | 17.56 | 25.27 |
- Company has strong D/E ratio and has improved on its Long Term D/E ratio
- Fixed Assets Turnover has improved.
JINDALSTEL – A Buy
The current level of the stock (347.75) is way too below than the 52-week high (663) and an upside is expected. Over the long term too the company will be a good buy, going by the fact of its enormous expansion plans which gives the company strong fundamentals of 4/5. The recent offer by JSPL to buy Gujarat NRE will only add to the company’s value and the buyout will prove to be an excellent asset. Thus a strong buy position is suggested for the company.
Jindal Steel and Power Ltd. Future Outlook
The Company has recently secured the development rights for 20 billion tonne of El Mutun Iron Ore Reserves in Bolivia by which the company plans to invest US$ 2.1 billion in the next few years on mining and on setting up an integrated 1.7 MTPA Steel Plant, 6 MTPA Sponge Iron plant, 10 MTPA Iron Ore Pellet Plant and 450 MW power plant in the South American nation. This expansion policy overseas will help the company tap the overseas market so as to expand its market share internationally.
Company has already secured land to start the project this year whereas the commercial dispatch of iron ore has already commenced in Bolivia. The planned projects are expected to become operational in the next 3-4 years which will be a positive sign for the company’s operations.
Apart from these the company also went for some inorganic growth overseas by acquiring Shadeed Iron & Steel Co. LLC (Shadeed) in Oman through its 100% subsidiary Jindal Steel & Power (Mauritius) Ltd., Mauritius (JSPLM). Jindal Shadeed has installed a 1.5 MTPA gas-based Hot Briquetted Iron (HBI) plant with an investment of US$ 500 million and started commercial production from the Oman plant five months ahead of schedule in December last year which is a major achievement for the company.
Further as part of expansion company plans setting up a steel plant and rolling steel mills in Oman in the next two years.
Thus we see that the company’s expansion plans are well in place and are running on or before the schedule. Thus the company is fundamentally pretty strong for investment and will be doing great in years to come in near future.