Near-term margin pressures for JSPL on likely tapering of steel prices

Captive coal availability and zero-debt target by the end of the year are positives

Jindal Steel & Power (JSPL) delivered a positive surprise in terms of higher-than expected operating profit in the first quarter of the 2022-23 financial year (Q1FY23). It has also received four capital coal blocks, which will ensure that it can meet demand for thermal coal from internal sources, once these are operational.

However, costs also escalated in Q1, and working capital costs rose, due to higher inventory levels. Given the expectations of lower steel prices going forward and the negative impacts of export duty, and rising inflation, some analysts are giving ‘reduce’ recommendations while others remain ‘positive’ on the stock.