JINDAL STEEL AND POWER
Reco price/date: Rs 348/April 1
Current/target price: Rs 342.9/Rs 360
Media reports suggest that Jindal Steel and Power (JSP) would soon be awarded with long pending mining lease (ML) for its 5.5mtpa Utkal B-1 coal mine. ML would provide some relief for its 1.6mtpa steel and 810MW power plant in Angul. However, analysts believe that current market price fairly discounts clearance of coal mine and remains increasingly concerned about the weak earnings profile of the Angul project owing to over-supply in plate segment, uninspiring earnings in upcoming 2400-Mw Tamnar phase-II (part of Jindal Power (JPL)) and sluggish outlook on the steel sector. Maintain Reduce
TILAKNAGAR INDUSTRIES
Reco price/date: Rs 60/1 April
Current/target price: Rs 60/Rs 90
Tilaknagar Industries indicated that price hikes are in place in most of the states. Prices in Kerala are up by 5-12 per cent across different states. With healthy price hikes, analysts expect the company to maintain or expand margins in FY14. Owing to the new quota system in Tamil Nadu (TN), Tilaknagar has lost 70 per cent volumes. Sales of Mansion House brandy are down 23 per cent yoy. The company indicated that sales will remain weak for the next 2-3 quarters. It expects low single-digit volume growth in TN over the next two years. Weaker revenues in brandy will continue to hit overall margins by 150-200bps, considering the company receives the highest margins in brandy. Maintain Buy.
Reco price/date: Rs 348/April 1
Current/target price: Rs 342.9/Rs 360
Media reports suggest that Jindal Steel and Power (JSP) would soon be awarded with long pending mining lease (ML) for its 5.5mtpa Utkal B-1 coal mine. ML would provide some relief for its 1.6mtpa steel and 810MW power plant in Angul. However, analysts believe that current market price fairly discounts clearance of coal mine and remains increasingly concerned about the weak earnings profile of the Angul project owing to over-supply in plate segment, uninspiring earnings in upcoming 2400-Mw Tamnar phase-II (part of Jindal Power (JPL)) and sluggish outlook on the steel sector. Maintain Reduce
Prabhudas Lilladher Research
TILAKNAGAR INDUSTRIES
Reco price/date: Rs 60/1 April
Current/target price: Rs 60/Rs 90
Tilaknagar Industries indicated that price hikes are in place in most of the states. Prices in Kerala are up by 5-12 per cent across different states. With healthy price hikes, analysts expect the company to maintain or expand margins in FY14. Owing to the new quota system in Tamil Nadu (TN), Tilaknagar has lost 70 per cent volumes. Sales of Mansion House brandy are down 23 per cent yoy. The company indicated that sales will remain weak for the next 2-3 quarters. It expects low single-digit volume growth in TN over the next two years. Weaker revenues in brandy will continue to hit overall margins by 150-200bps, considering the company receives the highest margins in brandy. Maintain Buy.
Anand Rathi Equities