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- MARKET OUTPERFORMER 17th December, 2002 Industry : Category : Recommendation : Stainless Steel Growth Strong Buy
A division of
502,Nirmal Tower Barakhamba Road,New Delhi-110001 E-mail : email@example.com Analyst : D V Prasad (9810018028) P D Gupta (011-25269790)
Present Price BSE Sensex Reuters Code
: : :
Rs.115.00 3312.25 JNST.NS/BO
Current Equity Face Value Book Value Market Cap. Free Float 12 Months High/Low Listing : : : : : : : Rs. 18.91 cr. Rs. 10 Rs. Rs. 283.65 cr 56% Rs. 143/45 BSE / NSE
Jindal Strips Ltd. (JSL) managed by Mr. Ratan Jindal is the largest integrated stainless steel manufacturer (capacity-4 lacs mtpa) in India and is ranked among the top 15 producers globally. Capacity expansion from 4 lac. mtpa to 5 lac mtpa in FY04 by debottlenecking and financed through internal accruals to place JSL among the top 10 producers of the world. Complete integrated facilities for manufacture of stainless steel from in house chrome ore mining gives it a high competitive advantage. JSL has a broad range of value added products viz. currency coin blanks, razor safety blades, etc with cost efficient integrated production facilities. Jindal Strips enjoyes market leadership in domestic market and its market share has increased from a mere 19% in FY95 to over 43% in FY02. Increased focus on export of valued added products with establishment of marketing offices in China, Vietnam and Italy to further accelerate export sales. Order book position full till March 2003. Stainless Steel (SS) in India has grown @ 12% as against 6% for the steel industry. Global demand especially that of Asia for SS exceeds supply by a wide margin has China and South Korea have become the major demand driver. India enjoys locational advantage in shipping SS to China. Likely acquisition of Salem Steel Plant will further consolidate JSL’s leadership position on account of premium brand of Salem steel products. Low equity base, high entry barrier, low operating cost, versatile manufacturing facilities and high value added products makes Jindal Strips a good growth stock. Jindal Strips at Rs. 115 (discount FY03 and FY04 earnings by just 2.93 and 2.41 times respectively) is an excellent investment opportunity in stainless steel industry which merits higher discounting due to its high value added products.
SHAREHOLDING PATTERN (%)
Promoter’s & Associates FII’s / OCB’s / NRI’s Inst. / Banks / Mutuals Funds Resident Companies Public : : : : : 44% 2% 2% 20% 32%
Rs. in crores Particulars Sales Op. Profit OPM (%) Net Profit Equity E.P.S. Dividend (%) FY01 1458.29 222.02 15.35 53.24 18.91 27.27 40 FY02 1493.68 244.51 16.48 31.66 18.91 16.00 40 FY03P 1926.50 310.90 16.14 76.20 18.91 39.19 50 FY04P 2058.50 329.40 16.00 92.30 18.91 47.70 60
JINDAL STRIPS LIMITED
BACKGROUND AND MANAGEMENT
Jindal Strips Limited, ISO 9902 and ISO 14001 certified is the flagship company of the Jindal Organization. The company has come a long way from a single factory establishment started in 1970. It is the largest integrated manufacturer of quality Stainless Steel in India and caters to 40% of the total demand for stainless steel in the country. Products ranging from Stainless Steel Slabs & Blooms, Flats, Paltes, Hot Rolled/ Cold Rolled Coils, Precision strips are produced as per international specifications . Jindal Strips Limited (JSL) attained its current shape after demerging the Raigarh unit (engaged in the manufacture of sponge iron which is currently a division of Jindal Steel & Power Ltd. ) in line with scheme of arrangement on 2nd April,1998. The cold rolling division at Vasind, Maharashtra was transferred to Jindal steel & Alloys Ltd, a 100 % subsidiary of JSL . After the de-merger, JSL has become a focused stainless steel company as depicted below :
$ 1.5 billion group headed by Mr. O.P. Jindal – a great visionary of steel industry
JSL now a focused stainless steel company
RESTRUCTURING OF JINDAL STRIPS LTD IN 1998 Stainless Steel Division Hisar & Visakapatnam
JINDAL STRIPS LIMITED Focused Stainless Steel Company 100% subsidiary
JINDAL STRIPS LIMITED
Cold Rolling Division Vasind
Transferred to Jindal Steel & Alloys Ltd
Sponge Iron Division Raigarh
Hived off as JINDAL STEEL & POWER LIMITED
JINDAL STRIPS LIMITED
Its stainless steel melting production has also gone up from 2.26 lac MTPA in FY02.25 Lac MTPA in 1998-99 to 3. Arvind Parekh.5 billion Jindal group is headed by Mr. Mr. Ratan Jindal (Vice Chairman & Managing Director) added by a team of experienced professionals like Mr. Garg. a key ingredient for making stainless steel and also possesses in house mining rights for Chrome ore. The graphic picture of group companies is illustrated below : RATAN JINDAL JINDAL STRIPS Stainless Steel HR / CR Coils High Carbon Ferro Chrome NAVEEN JINDAL O. Ratan Jindal.G. Jindal Strips.50. JINDAL GROUP SAJJAN JINDAL JINDAL STEEL & POWER Sponge Iron. Jindal Iron & Steel . Mr.P. During this period. MS slabs JISCO JVSL HR/ CR Sheets. R. Cold Rolling capacity witnessed a phenomenal 3 fold growth from 30.000 MTPA to 90.00. 800 cr in FY99 post demerger of other divisions as above( a compounded growth rate of 18 %). GROUP PROFILE The $ 1. Jindal Steel & Power. JSL is exclusively looked after by Mr. The Jindal group’s well known companies include. Integrated Steel Plant P.P.C.Regular capacity additon to meet growing demand The company enjoys the benefit of having in house production facilities for High Carbon Ferro Chrome. The total melting capacity has increased from 2. Power RUBM. All these has been achieved under the dynamic leadership of Mr. 1350 cr in FY02 from a Rs. Mathur and a host of other technocracts who have depth knowledge of steel industry. thereby making it the largest integrated stainless steel manufacturer in India and among the top 15 in the world. Saw Pipes etc. It is to the credit of Jindals that they are ranked sixth amongst the top Indian Business Houses in terms of their huge assets.000 MTPA. The turnover of JSL has gone up to Rs. Jindal Vijaynagar.000 MTPA. All these companies are independent entities and are managed professionally. R. N.000 to 4. O. JINDAL SAW PIPES Submerged Arc Welded Pipes JINDAL STRIPS LIMITED 3 DVP RESEARCH . Jindal with primary interests in Steel and Power Sector. After the demerger of Jindal Strips in 1998.
This will result in the enhancement of equity capital from Rs.73 cr. 18. of equity shares to be allotted on conversion would be 118.SHAREHOLDING PATTERN As on 30.91 cr.Equity Capital : Rs. 2002. to Rs. as on 31st March. The total outstanding amount is Rs.1999. JSL has allotted 5.710. This will also help in the reduction of the anticipated dilution of equity.13. 2004. 01. 30. 30.09.2002 . As on 01. JINDAL STRIPS LIMITED 4 DVP RESEARCH . it is expected that bonds would be redeemed before the holders opt for conversion as company is expected to generate sufficient cash that too foreign exchange due to its booming export sales.91 crore Resident Companies 20% Institutions/ Banks/ Mutual Funds 2% Promoter's & Associates 44% Public 32% FIIs/OCB/NRIs 2% Further. than the total no. 18.75% Euro Convertible Bonds for a total of $ 30 million to foreign investors on 17th December.49 cr. These bonds are convertible into equity shares at a predetermined price of Rs. Assuming that all the bond holders exercise their right to convert their bonds.Equity Capital : Rs. if not redeemed or converted before 17th December.73 crore Companies 12% Institutions/ Banks/ Mutual Funds 1% Public 20% Promoter's & Associates 26% FIIs/OCB/NRIs 41% In order to maintain the promoter stake.124 per share. 2005 . 146.
The present production capacity is about 15000 MT per month inclusive of all grades i.26 lac MT of Stainless Steel in FY02. to meet the growing demand. 2002. Further. hot rolling mills (steckel mill. These acquisitions are expected to be financed through internal resources. 55. Integrated facilities and low cost of production gives JSL a high competitive edge. JSL has taken over 89 hectare in Orissa to source chromite ore for captive use. The cold rolling plant provides the maximum value addition to the stainless steel. annealing & pickling lines and finishing facilities are also a part of the existing facilities at Hissar. JINDAL STRIPS LIMITED 5 DVP RESEARCH C ost advant age due t i o n house f ltes w ih aciii t captve i mi nes . This mill has an installed capacity of 1. In order to meet growing demand locally as well as for exports. HIGH CARBON FERRO CHROME Ferro chrome. power plants and oxygen plants etc is situated at Hisar.5 lac MTPA. However. COLD ROLLING UNIT C apaciy t expansi i on n a val ue added segm ent The cold rolling unit comprises of cold rolling.5 lac MT . finishing units. low and medium chromite ore. Its capacity utilisation was to the extent of 92 % in FY02 as against 147 % in the corresponding previous year.e. a key component in the production of stainless and special steels. high. The situation has improved now and the production has been restarted in November. The unit which has an installed capacity of 40000 MT produced 11210 MT of High Carbon Ferro Chrome in FY02 as against 29238 MT in FY01. strip mill). approx. This significant increase in capacity would take JSL in top 10 stainless steel producers in the world.DIVISIONS JSL currently has the following three divisions at two locations i.0 Lac MT in FY04. It has an electric arc furnace of 2. 000 MT. The reduction in output was on account of labour trouble in the plant. the capacity of this melting facility has been stepped upto 4. The tandem mill has a capacity of 1. Hissar & Visakhapatnam in India. HOT ROLLING UNIT The hot rolling unit comprising of steel melting shops. the capacity utilization at Plate and Steckel mill has also gone up from 47 % in FY01 to 73 % in FY02. the major manufacturing location of the company.e. JSL is planning to increase the ferro capacity by acquiring small ferro chrome units in the States of Orissa and Andhra Pradesh. Chromite Mines In order to enhance competitiveness. is manufactured at Visakhapatnam .0 lac MT in FY03 and is even expected to go further upto 5. in FY02. The installed capacity of the plant has been increased from 30000 MTPA in FY01 to 90000 MTPA in in Oct’01. The reduced utilisation of tandem mill was on account of large exports of stainless steel slabs to USA .50 lac MT capacity which operated at more than 130 % capacity to produce 3.
This company is engaged in cold rolling in strips/ sheets.USA. 55 cr.A 100 % subsidiary of company formed pursuant to demerger in 1998.) This investment has depreciated considerably for which no provision has been made. The company has incurred losses mainly due to depressed market conditions in US and steep rise in cost of inputs . . 18. Further. 23 cr.37 lac MT of CR coils / sheets in FY02. it has made an investment of about Rs. JSL acquired 61 % stake in the company through wholly owned subsidiary Jindal Stainless (Mauritius) Limited. 16. 1. Further.000 MT per annum It posted a turnover of Rs. This company is engaged in the manufacture of cold rolled stainless steel products. It has major investment in other Jindal group companies like Jindal Vijaynagar Steel Ltd.77 cr. Jindal Stainless (Mauritius) Limited .52 cr. of Rs. Concern about investments in JVSL engaged in investment business. 6.JSL has 87 % stake in the company which is primarily di d. 41 cr.. Total accumulated losses of the company stand at Rs.5 crore acquired at @ Rs. 22. It has cold rolling capacity of 40.A 100 % subsidiary of company incorporated in January. in FY02 in its first full year of operations after takeover by JSL.In order to expand in the overseas market particularly US.9 crore and a loss of Rs. in FY02.30 per share. Jindal Steel & Alloys Limited . it has made an investment of about Rs.1 cr. 22.6 crore in an unlisted outfit. in unlisted outfits. 12.16 crore in FY02 with total accumulated losses standing at Rs.. JINDAL STRIPS LIMITED 6 DVP RESEARCH . The company reported a loss of Rs 2. USA . 74. ( Rs. JSL is planning to divest its stake in the company most likely to a strategic investor or otherwise. The company has made an investment in Jindal Vijaynagar Steel Ltd. 2002 Ji ndalH o l ng Lt . Currently a drag on company May be divested in near future Massillon Stainless Inc. in 2000. and posted a profit Rs. 2000 to acquire controlling interest in Massillon Stainless Inc. It produced 1.SUBSIDIARY COMPANIES JSL has 4 subsidiary companies as on 31st March.
The hot rolled products command a good value addition over slabs and blooms with a realization range from Rs. Capacity to rise from 4. JINDAL STRIPS LIMITED 7 DVP RESEARCH . blade steel. 45. It still remins the exclusive producer of razor / surgical blade steel in the country. besides making various customised products.e. the capacity of these has been increased from 2. These products command very high premium in market and fetch high realization of more than Rs 1. 60. plates. The realizations from these products range from Rs.0 Lac MTPA in FY04.5 lac MTPA to 4. industrial. PRECISION STRIPS These are high vaue added product range from JSL. etc. office. turbines and other engine components which fetch good returns. precision strips. The company has a unique distinction of developing the special martenesic stainless steel strips for use in manufacturer of razor / surgical blades for the first time in India.000 – 80.000 per MT. The capacity of these units is expected to go upto 5. are produced using in house slabs and blooms from steel melt shop.10 lac per MT.0 lac MTPA in September. in domestic market. JSL developed 430 grade ferritic stainless steel for making currency coins in 2001.000 per MT. flat bars. JSL has also developed special stainless steel for critical components in nuclear applications. These products are mainly sold to rerollers and find usage in utensils/ white goods and industrial & construction sector.17 lac per MT in FY02. hot / cold rolled products. CONTINUOUS CAST PRODUCTS The slabs and blooms are produced to meet the captive requirement for Hot Rolled and Cold rolled divisions.0 lac MT in FY04 to meet the growing demand Value addition through inhouse hot/ cold rolling mills High value added products developed for use in razor blade CURRENCY COIN BLANKS Another specialised product It is another high value added product from JSL. etc. household.PRODUCT PROFILE The various products produced by the company are continuous cast products. Coin blanks fetched realizations of Rs 1. The cast and blooms are produced in steel melt shops. These are also sold to other manufacturers of hot rolled and cold rolled coils and sheets in domestic as well as international markets. 2002. The precision strips are rolled upto 0. coin blanks etc. HOT ROLLED AND COLD ROLLED PRODUCTS The hot / cold rolled products including coils.000 – 60.0 to 5.10 mm thickness in width upto 350 mm. Company also has a state of art design centre at New Delhi for developemnts of new designs for applications of stainless steel in value added segments i.
19. the industry is expected to grow at the rate of 5 % in next 10 years. The growth in demand of stainless steel is as below : The growth in stainless steel world wide is outstripping the growth of other primary materials like crude steel. high strength.t.r. from 1950 to 2001. the demand is expected to go up to 30 Million MT by 2010 (Steel & Metal Market Research-Austria). corrosion resistance. excellent green credentials. non-reactive properties etc. aluminium with the exception of plastics as below: . construction sector etc. GROWTH IN PRODUCTION OF PRIMARY MATERIAL 500 450 400 350 300 250 200 150 100 50 0 1970 1975 1980 1985 1990 1995 2000 P l a s t ic S tainles s S teel A lum inium C rude S teel 138 MMT 19 MMT 30 MMT 787 MMT JINDAL STRIPS LIMITED % GROWTH 8 DVP RESEARCH . Further.INDUSTRY PROFILE The stainless steel is finding a wide range application all over the world due to its unique properties w. The surge in demand is coming mainly from increased usage in white goods.e. The world’s stainless steel production was approximately.0 Million MT out of a total of about 800 Million MT of steel produced in FY02. The stainless steel industry has grown at a compounded rate of 6 % in last 50 years i.
China is expected to become a major importer of stainless steel to meet its huge demand . With proposed capacity expansion by another 1. Taiwan. processing plants etc.4 1.4 million MT is among the top 15 producers of stainless steel in the world.85 Italy 0.8 11. Western Europe and Asia were 2. stainless steel demand is growing at a fast pace at the rate of 18 % in the last decade due to increased usage in China.4 8. JSL enjoys the strategic location advantage to meet the surging Chinese demand. construction.75 . South Korea.63 % in the last 10 years respectively.The stainless steel realizations are 3-4 times of other steel products The major producers in the world are Arcelor. Consumption of Stainless Steel per capita 30 25 20 15 10 5 0 Germany South Korea Taiwan Japan Country As it can be seen from above.6 % and a whopping 18. Japan etc. per capita consumption of stainless steel in India is only 0.0 million MT each. 9 DVP RESEARCH JINDAL STRIPS LIMITED India Tremendous scope for future growth due to low consumption in India Kg per annum 30 23 15 13. 5. the demand of stainless steel is expected to grow at a fast rate in the country which is expected to grow @ 7-8 % annually. etc.. With arise in living standards. Acerinox with capacities of about 2. The stainless steel consumption pattern for world and domestic markets is as below : World Welded tubes 3% P ro c e s s 12% C o ns truc ti o ns 1% T ra n s p o rt 1% U tenc ils / White G o o ds 75% T ransp o rt 15% P ro c ess 12% C o ns t r u c t i o ns 11% China W eld ed tub es 19% USA India O thers 6% U tencils/ W hite Goods 37% O thers 8% Locational advantage to meet surging chinese demand In Asia.0 lac MT in FY04.5 kg. due to increased application of stainless steel in new areas like transport. JSL with its melting capacity of 0. The growth in stainless production in America. similar usage pattern in domestic market will spur growth for the stainless steel manufacturers. Further.1 %. it will leap frog to top 10 producers in the world. Avesta Polarit. KTS.75 kg as against world average of about 3. in the world market.
PROCESS FLOW CHART JINDAL STRIPS LIMITED 10 DVP RESEARCH .
HIGH VALUE ADDED SEGMENT JINDAL STRIPS LIMITED 11 DVP RESEARCH .
Initially many bidders were interested which included TISCO alongwith a foreign partner. JSL will make the initial equity investment primarily through internal accruals. JINDAL STRIPS LIMITED 12 DVP RESEARCH . With acquistion of Salem. 2002. JSL will command 50 % share of domestic market and enjoy immense benefits on account of synergy. The market share of various players in domestic market is as under: Salem’s strong brand to benefit JSL Unorganised sector 16% JSL 43% Others 34% SALEM 7% Acquisition of salem to provide benefits on account of synergy. It is the largest producer of SS products . logistics and market access As part of its restructuring of SAIL. logistics. It is anticipated that Salem plant would be sold in the range of Rs 400 . thereby branding it like a FMCG company. The book value of the unit is about Rs.ACQUISITION OF SALEM PLANT OF SAIL SALEM STEEL plant of SAIL is the second largest unit engaged in the production of stainless steel products in the country with a market share of 7 % in FY02. JSL has started due diligence process and has appointed M/s Ernst & Young as its consultants.500 cr. it was decided by Govt. The equity holding is likely to be 74 % with JSL and its associates and the balance remaining with SAIL. JSL is now the sole bidder left for this acquisition. and Jindal Strips etc. JSL is expected to form a new Joint venture company to acquire Salem plant. of India in 2000 to divest its Salem unit enagaged in the production of SS products. In order to restrict further leveraging of its highly geared balance sheet . TISCO has decided to withdraw from the process while other bidders had already withdrawn at the initial stage. brand and market access.primarily sheets used for making utensils in South India. Salem steel enjoyes the distinction of a very strong brand image in SS market. as of March. 800 cr. Now.
JSL has increased the capacity of cold rolling mill to 90.000 MT per annum in FY02. 75.000 MT from 30.e. low and medium type of chromite ore. slab heating furnace etc. this ferro chrome is supplied to another Jindal company . cold rolled products are also developed for use in railway coaches initially for Metro Rail which may also find use in conventional coaches. for manufacture of high carbon ferro chrome for onward supplies to JSL.Jindal Steel & Power Ltd. Further. The present production capacity is about 15000 MTPA inclusive of all grades i. This inhouse mining of chrome ore will reduce the cost of production of high carbon ferro chrome. This plant is equipped with a state of the art testing laboratory to meet stringent quality standards for international markets. a key component in the production of stainless and special steel. This will improve operational efficiencies / product yield at cold rolling units. These products are primarily used in utensils. Shift towards high value added products JINDAL STRIPS LIMITED 13 DVP RESEARCH .STRATEGIC COMPETITIVE ADVANTAGES BACKWARD INTEGRATION CHROME ORE Captive mines To meet its requirement for production of High Carbon ferro chrome. JSL has taken over 89 hectare in Orissa to source chromite ore in 2001. HIGH CARBON FERRO CHROME Produced for Captive Use Ferro chrome. is manufactured at Visakhapatnam Division of the company with an an installed capacity of 40000 MTPA. high. This plant besides meeting the captive requirements also exports ferro chrome to various developed countries. are being installed to produce 15 MT coils as against 6-8 MT produced presently.000 per Ton. Further . additional facilities i. FORWARD INTEGRATION COLD ROLLING To shift the product-mix towards value added products. The cold rolling facilities produces high value added products with realization going up to Rs. Incidentally. white goods etc.000 – 85.e.
. a coin blanking line of 3000 Mt per annum capacity was installed in 2001. It has a capacity of 10000 MT per annum for precision strips.000 MTPA BEING ENHANCED TO 5.10 lac per MT. JSL has put up Bell annealing furnaces . shot blasting equipment.17 lac per MT. The backward and forward integration of facilities is depicted as below: BACKWARD AND FORWARD INTEGRATION OF FACILITIES Another value added product SS SCRAP.PRECISION STRIPS Razor steel high tech product line In order to enhance the value addition.OOO MTPA HIGH CARBON FERRO CHROME 40. This is being increased to 5000 Mt per annum. 4 Hi and 20 Hi Mills.000 MTPA SS MELTING CAPABILITY 4.000 MTPA ( IN HOUSE PRODUCTION) HOT ROLLING CAPABILITY PRECISION STRIPS 10.000 MTPA JINDAL STRIPS LIMITED 14 DVP RESEARCH . fetches an attractive realization of more than Rs 1. COIN BLANKING LINE Continuing with its efforts to develop value added products. ETC.00. continuous bright annealing furnace and slitting machines to produce precision strips. JSL’s capability to produce specialized steel strips for use in razor blades etc. NICKEL. (OUTSOURCED) COLD ROLLING 90. FERRO MANGANESE. The special steel is supplied to Indian mints for making coins with a very high realization of Rs 1.000 MTPA CHROME ORE ( IN HOUSE MINING) COIN BLANKING LINE 3.
special steel for coins etc with its own R&D efforts. Its Research & Development Division is not only developing products but also putting in lot of efforts to enhance plant process and technical capabilities which result in quality improvement and cost reduction.800 . Assuming a liberal debt : equity ratio of 2 : 1. Rs. The cost of setting up of similar integrated facilities has a minimum gestation period of two years.000 cr. Strong inhouse R&D 2000 Higher cost and longer gestation time for new entrants 1500 1200 1000 500 0 946 600 18. 600 crore( this being more than 30 times of current equity of JSL i. stainless steel for railway coaches.91 crore). Such a huge capacity on a low equity base ensures sustained profits for JSL. ENTRY BARRIERS The stainless steel manufacturing facilities are highly capital intensive which act as a deterrent to new entrants.2. A similar new project at current prices will cost Rs. 18. JSL has developed cold rolled stainless steel strips for razor/ surgical blades.1.91 JSL New Entrant Loan Equity JSL ‘s Advantage JINDAL STRIPS LIMITED 15 DVP RESEARCH .TECHNICAL EDGE JSL has a distinction of developing products using technology with a thrust on use of strong inhouse Research & Developments facilities.e. It has also developed low cost alternate 200 series with low Nickel which received huge success in domestic market and is being launched selectively in overseas market. the equity of such a project would be Rs.
JSL is opening marketing offices in China.) It may be noted from the graph that in first of FY03. 000 MT of stainless steel to USA. South East Asian countries and Europe. In FY02. 417 cr. Vietnam & Italy. JINDAL STRIPS LIMITED 16 DVP RESEARCH . JSL received a major order of 55000 MT from US which accounted for almost 70 % of its exports. The trend of exports and country wise exports of JSL are shown below : TREND OF EXPORTS 140 120 US $ ( in Million) 100 80 128 60 85. 417 crore) In Ist Half FY03 ( Rs. in FY99 to Rs. the exports have surged primarily in China.3 Year Others 2% China/ HK 27% Japan 1% Europe 1% USA 69% E X P O R T S Italy 4% Others 7% China/ HK 89% In FYO2 ( Rs.99 32. The consumption of Stainless steel has grown @ 17 % in China in the last few years as against the world average of about 6 %. etc.8 40 20 0 2. Rs 10 cr. in FY02. In order to tap this huge demand in China. JSL’s capability to serve this market is reflected from growth in its export which has gone up from approx. China. In FY02. 317 cr. and exports to China/ Hong Kong now accounts for almost 90 % of JSL exports .EXPORTS Positive outlook for the steel industry The exports for stainless steel are expected to grow at a fast pace keeping in view the growth in demand from China. JSL exported more than 83.31 1998-99 1999-00 2001-02 2001-02 2003P 25.
5 3.) P/E ratio (x) Market Cap/Sales(x) Sales/ Equity Ratio JSL 18.7 -7.7 18.6 18. 2 SAIL 4130.37 0. in crores) PARTICULARS Equity Net Sales OPM (%) Significant jump to take place in net profits from current year PBDT (%) NPM (%) E.3 TISCO 368.4 14064.9 20. (Rs.40 (All figures as of March.4 5.24 16.5.9 1367.17 72.7 7.3 0.S.57 0.P.75 18.4 14.0 10.26 3.2 14.INTERFIRM COMPARISON (Rs. 2002) 80 70 60 50 40 30 20 10 0 JSL TISCO SAIL Tremendous Advantage over Peers JINDAL STRIPS LIMITED 17 DVP RESEARCH .2 5.5 .2 6707.2 9.
00 11.69 FY03P 39.40 FY04P 47.45 222.5 76.2 34.19 143.84 11.8 104.60 2.5 1926.57 57. 02 6m 870.32 93.40 2.5 1615.24 18.96 16.27 65.66 871.4 85.91 20 511.02 91.2 139 12.94 32.84 4.49 157.45 1458.2 105.29 1400.38 48.9 92.51 101.91 10 446.18 52.83 1.44 1512.34 3.65 16. in crores) Particulars Net Sales Other Income Total Income Total Expenditure Operating Profit Interest Gross Profit Depreciation PBT Tax Extraordinary Items Deffered Tax Net Profit Equity Preference Capital Reserves Loan Funds Total Funds Employed Debt : equity ratio FY01 1446.2 18.79 16.90 855 1483.34 244.86 4.91 15 532.97 3.09 42.68 1444.94 3.40 946.35 8.70 103.3 18.41 72.07 18.5 218.6 310.70 40 Sept.77 55.05 897 1446.5 116.33 60 EPS CPS Dividend % HFY03 17.97 15.5 2058.61 2.03 FY02 16.66 18.96 1.5 92.6 0 53.19 92.FINANCIAL HIGHLIGHTS (Rs.72 FY01 27.7 31.86 50 FY04P 2050 8.2 9.03 11.81 1.87 329.98 14.09 1421.9 8.4 101.67 714.34 2.98 49.61 130.12 18 18.48 4.88 Key Ratios OPM % PBDT % NPM % JINDAL STRIPS LIMITED 15.14 11.68 1493.48 DVP RESEARCH .2 244.5 1808.48 9.00 65.91 20 FY03P 1920 6.48 946.09 33.65 40 FY02 1484 9.91 20 589.01 1.
00 20.00 100.00 FY01 EPS Year FY02 CPS FY03P FY04P Dividend % JINDAL STRIPS LIMITED 19 DVP RESEARCH .00 40.GRAPHICAL PRESENTATION OF FIGURES 2500 2000 Sales (in crore) 1500 1000 500 0 FY 01 FY 02 FY 03P FY 04P Year 120.00 60.00 0.00 In Rupees 80.
The operating margins have gone up from 15.3 cr. to Rs. The Earning per share (EPS) is expected to increase from Rs. The sales in domestic market has also up from Rs. 64 cr. JSL is expected to post a profit (PAT) of Rs. 317 cr.35 % in 2000-01 to 18 % in HY03 is on account on larger share of value added products and also general improvement in stainless steel market. in FY03 and FY04 respectively an increase of 27 % in 6. 310 cr. 92. With reduction in interest out go due to restructuring / part payment of loans.5 % over previous years. The increased in sales is mainly on account higher domestic demand. and Rs. and Rs. 1920 cr. The cash earning per share (CPS) is also expected to go up from Rs. in FY04 due to commissioning of melting capacity of 1. to Rs. 417 cr.70 to Rs 93 and Rs 103 in FY03 and FY04. in FY03 an increase of 29 % on previous year due to increase in exports from Rs. to Rs. and domestic sales. The turn over is further expected to go up to Rs. in FY03 and FY04 an impressive increase of 140 % and 21 % respectively.0 MT during that year. 65. JSL is expected to post an operating profit of Rs. in HY03.FINANCIAL PERFORMANCE The financial performance in the current year is expected to improve considerably due to booming export demand and also steady increase in domestic demand. 76. 630 cr. The cash generation of more than Rs 200 cr. 330 cr. 630 cr. in these years would enable the company to fund its capacity addition in melting shop and also equity investment in proposed JV for acquisition of Salem steel plant. JINDAL STRIPS LIMITED 20 DVP RESEARCH . 550 cr. The operating margins are also improving due to increase in selling prices as well as cost cutting measures undertaken by JSL. We expect JSL to post a turn over of Rs. 16 to Rs 39 and Rs 47 in FY03 and FY04. This exports has gone up from Rs. 2050 cr. The operating margins may come down in coming years due to increased competition in export market and also increased export sales at competitive rates. In spite of overall lower operating margins.2 cr.
Probable dumping . JINDAL STRIPS LIMITED 21 DVP RESEARCH .SWOT ANALYSIS STRENGTHS WEAKNESSES • • P O S I T I V E S • Largest Integrated Stainless Steel manufacturer in India and ranked amongst top 15 in the world. Backward and forward integration of facilities Developed high-value added products Excellent sales-equity ratio OPPORTUNITIES Highly leveraged Unproductive investments in subsidiaries N E G A T • • • THREATS • I V E S • • • • Booming export demand Proposed acquisition of Salem steel plant Wide scope due to low per capita consumption of stainless steel in India Capability to develop products for specialized use • Highly sensitive to price fluctuations in global markets in respect of nickel and stainless steel.
TECHNICAL OVERVIEW OBSERVATIONS JINDAL STRIPS LIMITED 22 DVP RESEARCH .
The inforamtion and views contained herein are believed to be reliable but no responsibility or liability is accepted for errors of act or opinion. high valueadded products. stratetic forward integration. healthy book-value and strong financials make JSL a good growth stock. Editors may or may not have trading or investment positions in the securities mentioned herein. versatile manufacturing facilities. 115 (discount FY03 and FY04 earnings by just 2. high entry barrier. credible and professional management.41 times respectively) is an excellent investment opportunity in stainless steel industry which merits higher discounting due to its high value added products.INVESTMENT STRATEGY Low equity base. low operating cost. high operating margins. Jindal Strips at Rs. adequate experience in timely project implementation. complete backward integration. JINDAL STRIPS LIMITED 23 DVP RESEARCH . Readers using the information contained herein are solely responsible for their actions. Disclaimer : The recommendation made herein do not constitute an offer to sell or a solicitation to buy any of the securities mentioned.93 and 2.
2002 firstname.lastname@example.org Highest Appreciation Price since rec.9810018028. (Finance). • MARKET COMMENTARY – For all participants who want a detailed outlook on the market – its current trend.00 734.00 3830. OUR EARLIER RECOMMENDATIONS Scrip Recommended in Rec.10.For long term investors who look at more than 30% returns over 6 months to 1 year horizon.00 90. EQUITY STRATEGIST 502. and JATINDER SHARMA.00 385.08. THE TEAM – D.00 4850. • SMS TIPS . secrets of successful traders etc.08.2002 12.EQUITY STRATEGIST THE PRODUCT .00 170.2002 18. carries support and resistance levels for all actively traded stocks with clear trading strategies.2002 23. future outlook ( short as well as long-term) and strategy to deal with it. New Delhi-110001 DV PRASAD . money management. Barakhamba Road.clear buy or sell strategies with logical targets and stop-losses. • FUNDAMENTAL PICK. Date 01.08.00 128. • TRADING OPPORTUNITIES.00 228.Bible for day traders.00 36% 8% -10% 27% 31% 33% 40% 15% 33% 26% 31% 2% Jindal Steel JB Chemicals Bharat Electronics IVR Construction Mastek Apollo Tyres Jindal Strip Jindal Steel BFL Software Infosys Infotech Enterprises NIIT Equity Strategist-Fundamental Pick Equity Strategist-Fundamental Pick Equity Strategist-Stock Watch Equity Strategist-Fundamental Pick Equity Strategist-Stock Watch Equity Strategist-Stock Watch Equity Strategist-Fundamental Pick Research Report Equity Strategist-Stock Watch Equity Strategist-Stock Watch Equity Strategist-Fundamental Pick Equity Strategist-Fundamental Pick For further information and subscription enquires kindly contact.Real time information and buy and sell advices during trading hours All this plus and a lot more like articles on domestic and global economy.A daily newsletter ( sent through e-mail) with a balanced approach.12.00 191.com JINDAL STRIPS LIMITED 24 DVP RESEARCH .A must for position traders.08. • Strictly independent analysis and views without bias since we are not associated with any brokerage house.Dedicated and highly experienced for over a decade.2002 21. APPROACH . Price 229.00 74.A refreshing approach with features that put it in a different league.09.2002 16.10. Nirmal Tower. market gossip.00 149.10.00 312.2002 30.00 215.funda newsletter that caters to the needs of all market participants through its various columns: • STOCK WATCH.2002 Rec.2002 16. • Two-way communication channel encouraged with the subscribers for better and clear understanding to build long-term fruitful relationships. market player or have any other vested interests.A favorite of swing traders who look at returns of 5-10% in 5-10 trading days.2002 14.09.A.00 174. • INTRADAY TRADES. No beating about the bush.2002 19. hardcore equity analysts totally devoted to stock market and doing research both on fundamentals and technical basis THE FEATURES . trading rules.A.C. company. away and much ahead of other me-too newsletters. system trading.00 272. EXPERIENCE .V. 312. and educational material on psychology of traders.00 199. M. primary market.00 506. • A straightforward approach.2002 16.00 550.00 187.00 112.A techno.PRASAD. F. JATINDER SHARMA ..00 185.9810265625 Email. carries stocks which promise returns of 10-15 % over 2-5 weeks.00 58.B.11.
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