Jindal Steel & Power hits over 2-year low; tanks 17% in two days

In the past three months, the stock has underperformed the market by falling 44 per cent, as compared to a 3 per cent decline in the S&P BSE Sensex.

Shares of Jindal Steel & Power hit an over two-year low at Rs 95, down 7 per cent on Thursday. The stock has plunged 17 per cent in the last two sessions on the BSE, on rumors of payment default, which company categorically rejected. The stock was trading at its lowest level since February 2, 2017, when it touched a low of Rs 93 in the intra-day trade.

“The Company wishes to clarify that all speculations/rumors with respect to payment default are baseless and false in nature. Investors are advised to treat such news as fake news,” JSPL said in a regulatory filing on Wednesday.

The company strongly reiterates that it is on track to deliver its highest ever volumes this year and should be able to generate better returns for its stakeholders, it added.

With regards to rumors regarding any sell-off in pledged shares, Managing Director (Designate), VR Sharma said "No sale of shares is reported by any of the lenders". More so, the promoter group is looking to reduce the pledge at the earliest.

At the end of June 2019 quarter, the promoters and promoter group held 60.52 per cent stake, of which they pledged 64.85 per cent stake.

The company is scheduled to announce its April-June quarter (Q1FY20) results on August 14, 2019. Analysts expected JSPL to post consolidated net loss of Rs 458 crore in Q1FY20 against net profit of Rs 2,076 crore in the year-ago quarter.

“Operating leverage benefits are expected to mitigate the impact of lower spreads as shipments are expected to rise 10 per cent year on year (YoY). EBITDA/t (steel only) is expected to fall 34 per cent YoY at Rs 8,556/t on lower steel spreads. Jindal Shadeed's EBITDA/t is also expected to halve to USD 76 owing to more intense import pressure and lower realisation,” Edelweiss Securities said in a quarterly preview.

“Consolidated EBITDA for the quarter is expected at Rs 1,888 crore (down 17.1 per cent YoY) and margin is expected at 19.1 per cent (vs. 23.6 per cent in 1QFY19), YoY fall is due to lower steel price, whereas, raw material prices have remained at the same level or have only increased. The company’s Wongawilli mine have been shut down and IPO of Oman business is getting delayed on account of weak financial performance of the business due to falling steel prices,” Narnolia Financial Advisors in results preview.

In the past three months, the stock underperformed the market by falling 44 per cent, as compared to a 3 per cent decline in the S&P BSE Sensex.

At 02:28 pm, JSPL was trading 3 per cent lower at Rs 100, against 1 per cent rise in the benchmark index. The trading volumes on the counter more than doubled with a combined 40 million shares changed hands on the NSE and BSE so far.