Result Update

October 23, 2015

Rating matrix

JSW Steel (JINVIJ)

Rating
Target

:
:

Hold
| 950

Target Period
Potential Upside

:
:

12 months
5%

Mixed set of numbers

Whats Changed?
Target
EPS FY16E
EPS FY17E
Rating

Changed from | 1050 to | 950

Changed from | 43.0 to | 38.8
Changed from | 82.8 to | 78.8
Unchanged

Quarterly Performance (Consolidated)

Q2FY16 Q2FY15 YoY (%) Q1FY16
Revenue
10,906.9 13,894.8
-21.5 11,576.2
EBITDA
1,729.3 2,791.2
-38.0 1,627.3
EBITDA (%)
15.9
20.1 -423 bps
14.1
PAT
117.0
748.8
-84.4
-106.8

QoQ (%)
-5.8
6.3
180 bps
LP

Key Financials
(| Crore)
Total Op. Income
EBITDA
Adj Net Profit
Adj EPS (|)

FY14
51219.6
9165.5
2164.7
89.6

FY15
52971.5
9402.3
1843.7
76.3

FY16E
48445.7
8178.5
938.0
38.8

FY17E
56462.7
10062.7
1904.5
78.8

FY15
11.9
12.5
5.8
0.9
8.0
10.3

FY16E
23.3
24.5
7.4
0.9
3.9
7.4

FY17E
11.5
12.1
5.9
0.9
7.5
9.5

Valuation summary
PE (x)
Target PE (x)
EV/EBITDA (x)
P/BV (x)
Adj RoNW (%)
Adj RoCE (%)

FY14
10.1
10.6
6.1
1.0
9.9
10.6

Stock data
Particular
Market Capitalisation
Debt-Cons. (FY15)
Cash Cons. (FY15)
EV
52 week H/L
Equity capital
Face value

Amount
| 21900 crore
| 34885 crore
| 1913 crore
| 54871 crore
| 1400 / 800
| 241.72 crore
| 10

Price performance (%)

Return %
JSW Steel
SAIL
Tata Steel

1M
-5.7
6.9
8.9

3M
3.8
-4.6
-12.6

6M
-6.9
-28.0
-28.2

| 906

12M
-21.3
-27.9
-44.5

Research Analyst
Dewang Sanghavi
dewang.sanghavi@icicisecurities.com

ICICI Securities Ltd | Retail Equity Research

JSW Steel reported a mixed set of Q2FY16 numbers wherein the

topline came in lower than our estimate while EBITDA and PAT
came in higher than our estimates. Despite a higher-thanexpected fall in realisation, the EBITDA and PAT level beat was
driven by a better-than-expected performance from subsidiaries
and lower-than-expected depreciation charge
The consolidated topline for the quarter came in at | 10906.9
crore (down 21.5% YoY, 5.8% QoQ) and lower than our estimate
of | 11666 crore
Consolidated EBITDA for the quarter came in at | 1729.3 crore
(down 38% YoY but up 6.3% QoQ) and better than our estimate:
| 1648.6 crore. The consolidated EBITDA margin came in at
15.9%, higher than our estimate of 14.1%. EBITDA/tonne of
standalone operations was at | 4908/tonne, marginally lower than
our expectation of | 5250/tonne. The consolidated beat was
driven by better-than-expected performance from subsidiaries
The ensuing consolidated PAT came in at | 117.0 crore and was
better than our estimate of | 24.7 crore

Guides for 7% volume growth in FY16E

The steel sector is currently facing headwinds in the form of a muted
demand scenario both domestically as well as globally. During H1FY16,
domestic steel demand growth of 4.1% YoY was primarily driven by
higher imports. During the first half of the current fiscal, steel imports
increased steeply by 41.4% YoY to 5.4 MT. In the current challenging
scenario, for H1FY16, sales volumes grew 6% YoY to 6.29 MT (for
Q2FY16 sales volumes grew 4% YoY to 3.19 MT). This augurs well for the
company. Going forward, for FY16E, JSW Steel has given a crude steel
production guidance of 13.4 MT (implying 6% YoY growth) and saleable
steel sales volume guidance of 12.9 MT (implying 7% YoY growth). We
have modelled sales volume of 12.6 MT for FY16E, 13.5 MT for FY17E.
Elevated debt level remains area of concern
Post the merger with Ispat Industries, the debt level of JSW Steel has
increased significantly. On a consolidated basis, at the end of Q2FY16, the
net gearing stood at 1.72x while net debt to EBITDA was at 5.32x. On a
standalone basis, at the end of Q2FY16, net gearing was at 1.22x while
net debt to EBITDA was at 4.55x.
Downward revise EBITDA/tonne estimate for FY16E, FY17E
JSW Steel reported a mixed Q2FY16 performance wherein while the
performance of subsidiaries came in better than our estimate, the
EBITDA/tonne of the standalone entity came in lower than our estimate.
The EBITDA/tonne of the standalone entity for the quarter was at
| 4908/tonne, lower than our estimate of | 5250/tonne. On account of a
muted EBITDA/tonne and subdued realisations, we have downward
revised our FY16E EBITDA/tonne estimates to | 6000/tonne (from |
6500/tonne earlier) and FY17E EBITDA/tonne to | 7000/tonne (from |
7250/tonne earlier). Subsequently, we downward revise our FY16E
EBITDA by 4.1% and FY17E EBITDA by 1.3%. Going forward, we value
the stock at 6x FY17E EV/EBITDA and arrive at a target price of | 950. We
maintain our HOLD recommendation on the stock.

Variance analysis
Q2FY16 Q2FY16E
Revenue
Other Income
Employee Expense
Raw Material Expense
Power & Fuel Expense
Other operating Expenses

EBITDA
EBITDA Margin (%)

Q2FY15

YoY (%)

10,906.9 11,666.0 13,894.8

39.0
30.0
26.5
414.2
367.7
386.8
5,839.6 6,087.1 7,648.7
980.9
974.9 1,095.4
1,942.9 2,587.8 1,972.6

1,729.3
15.9

1,648.6
14.1

Depreciation
Interest
Exceptional Item
PBT
Tax Outgo
PAT
Minority Interest, Share of Associate
&Extra Ordinary Item
PAT for the Group
Key Metrics
Steel Sales (MT)

682.2
836.3
1.4
248.3
142.4
106.0

919.3
748.7
0.0
10.6
3.2
7.4

850.9
855.0
0.0
1,111.8
373.7
738.1

11.0
117.0

17.3
24.7

3.2

Standalone EBITDA/tonne (|/tonne)

4908

Q1FY16

QoQ (%)

-21.5 11,576.2
47.3
25.8
7.1
421.8
-23.7 6,527.5
-10.5 1,034.0
-1.5 1,965.7

-5.8
51.3
-1.8
-10.5
-5.1
-1.2

2,791.2
-38.0
20.1 -423 bps

Comments
Topline came in lower than our estimate due to subdued realisations
Employee expense came in higher than our estimate
Power & fuel expenses came in lower than our estimate

Consolidated EBITDA came in higher than our estimate on the back of a

better-than-expected performance from subsidiaries
EBITDA margin came in higher than our estimate
Depreciation has been adjusted from April 2015. This leads to an adjustment
of | 250 crore. Hence, depreciation expense has come in lower than our
estimate
Interest expense has came in higher than our estimate

1,627.3
14.1

6.3
180 bps

-19.8
-2.2
PL
PL
-61.9
PL

938.5
822.2
0.7
-108.4
16.6
-125.0

-27.3
1.7
102.9
LP
PL
PL

10.7
748.8

2.4
PL

18.2
-106.8

-39.8
PL

3.1

3.1

3.2

3.1

3.2

Sales volume came in better than our estimate

5250

8534

-42.5

4838

1.4

Standalone EBITDA/tonne came in marginally lower than our estimate

Consolidated PAT has come in higher than our estimate

Source: Company, ICICIdirect.com Research

Change in estimates
(| Crore)

Old

FY16E
New

% Change

Old

FY17E
New

% Change

Revenue
EBITDA

50,416
8,527

48,446
8,178

-3.9
-4.1

56,514
10,200

56,463
10,063

-0.1
-1.3

EBITDA Margin (%)

16.9

16.9

-3 bps

18.0

17.8

-23 bps

EBITDA (|/tonne) *

6500

6000

-7.7

7250

7000

-3.4

Comments
We have downward revised our topline estimate on the back of
muted realisations
We have revised downwards our EBITDA estimate
We have revised downward our EBITDA margin estimate
We have downward revised our EBITDA/tonne estimate for
FY16E and FY17E, due to lower-than-expected EBITDA/tonne in
Q2FY16

Source: Company, ICICIdirect.com Research, *-Standalone entity

Assumptions

Total Steel Sales (MT)

EBITDA/tonne (|/tonne) *

FY13
8.9
7,089

FY15
12.0
7,375

Current
FY16E
FY17E
12.6
13.5
6,000
7,000

Earlier
Comments
FY16E
FY17E
12.6
13.5 Maintained sales volume estimates
6,500
7,250 EBITDA/tonne revised downwards for both FY16E and FY17E

Source: Company, ICICIdirect.com Research, *-Standalone entity

ICICI Securities Ltd | Retail Equity Research

Page 2

Company Analysis
JSW Steel, post its merger with JSW Ispat, got catapulted to the position
of one of the leading steel producers in India (combined steelmaking
capacity of 14.3 MT). In terms of capacity wise break-up, out of 14.3 MT,
10 MT is in Vijayanagar, Karnataka [8.4 MT through blast furnace (BF)
route with balance 1.6 MT through the Corex route], 3.3 MT in Dolvi,
Maharashtra (erstwhile Ispat Industries) and 1 MT in Salem, Tamil Nadu.
Relatively healthy EBITDA/tonne in current challenging environment
JSW Steels Vijayanagar steel unit is one of the lower cost converters
globally. The company does not have access to any captive operational
iron ore & coking coal mine in India and has to depend on external
purchases for its key raw materials iron ore and coking coal. However,
despite its dependency on external sources for its key raw materials, JSW
Steel was able to report healthy EBITDA/tonne due to economies of scale,
cost optimisation and healthy realisations (on account of superior product
mix). The company also has a notable presence in the value-added
products category, thereby having a large and diversified customer base
with enhanced profitability.
Exhibit 1: Steel sales volumes to grow at 6.1% CAGR in FY15-17E
16.0
14.0

12.0

10.0

8000

13.5

7375

7089

7000

7000

6000

6000
8.9

5000
|/tonne

8.0
6.0

4000
3000

4.0

2000

2.0

1000
0

0.0
FY13

FY15

FY16E

FY13

FY17E

Source: Company, ICICIdirect.com Research

FY15

FY16E

FY17E

Source: Company, ICICIdirect.com Research

Elevated debt level remains area of concern

Post the merger with Ispat Industries, the debt level of JSW Steel has
increased significantly. On a consolidated basis, at the end of Q2FY16, the
net gearing was at 1.72x while net debt to EBITDA was at 5.32x. On a
standalone basis, at the end of Q2FY16, net gearing was at 1.22x while
net debt to EBITDA was at 4.55x.
Exhibit 3: Gross debt & net debt trend
45000
40000
35000

37413

38885

38258

32971

15000

34099

20000

39985

25000
34762

| crore

30000
34885

million tonne

12.0

12.6

Exhibit 2: ..with EBITDA/tonne stabilising at ~| 6000-7500/tonne level

10000
5000
0
FY14

FY15
Gross Debt

FY16E

FY17E

Net Debt

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 3

Key takeaway from conference call

Despite the closure of blast furnaces at Vijayanagar and Dolvi, the
management has maintained FY16 production and sales volume guidance
of 13.4 MT and 12.9 MT, respectively. The management has also largely
maintained the capex guidance of | 5200 crore for FY16E and | 3800
crore for FY17E. For H1FY16, the company has incurred capex to the tune
of | 2450 crore.
JSW Steel is likely to add ~4 MT of capacity in Q4FY16, taking its total
capacity to ~18 MT by FY16-end. The additional capacity would come up
in Vijayanagar and Dolvi facilities.
The company plans to keep debt levels within the | 40000 crore limit by
March 2016. Debt covenants have been extended to March 2016 without
any increase in interest costs.
JSW Steel expects the benefit of US$5/tonne of steel due to softening
prices of coking coal as well as benefit of ~| 360/ tonne on account of
lower iron ore prices. The company has also initiated other cost reduction
measures in logistics, idle freight, and procurement (other than iron ore
and coal). However, the benefit will be partly offset by the closure of Dolvi
unit. JSW Steel has ordered the import of ~90,000-95000 tonne of HRC to
provide for closure of the Dolvi unit in Q3FY16.
The company has engaged an external agent to study the component of
plant and machinery to determine the useful life of an asset. Hence, the
corresponding depreciation has been adjusted from April 2015. This has
led to an adjustment to the tune of | 250 crore. From next quarter
onwards, the depreciation run rate for the standalone entity is expected to
be in the range of | 630 crore.
The company has been able to maintain prices of flat products while
prices of long products have declined in Q3FY16.
JSW Steel is also in the process of filing a petition for imposing a
safeguard duty on HR sheets, plates and wire rods.
Iron ore production in Karnataka has picked up, with an annualised
production run rate at 24 MT. The increase in production has allowed the
company to stop iron ore import for Vijayanagar plant.
The auction of 15 category C category mines in Karnataka is expected by
March 2016. As per ICFRE recommendation, these 15 mines are expected
to have a capacity of 4-5 MT. The company highlighted that capacity has
been constrained by lack of availability of dumping ground as well as
evacuation capacity apart from reserves determined production capacity.
Subsidiary Amba River Cokes reported EBITDA came in healthy at | 82.8
crore.

ICICI Securities Ltd | Retail Equity Research

Page 4

Performance of subsidiaries
JSW Steel Coated Products
During the quarter, JSW Steel Coated Products registered production
(galvanised/galvalume products) volume of 0.36 MT and sales volume of
0.37 MT. The gross turnover and net sales for the quarter were at | 1927
crore and | 1787 crore, respectively. It recorded an operating EBITDA of
| 102 crore and net profit after tax of | 22 crore for the quarter.
Chile iron ore mines
The Chile operations remain under care and maintenance from end April
2015. The company reported an EBITDA loss of US$0.49 million for the
quarter.
US plate and pipe mill
The US based pipe and plate mill facility produced 0.058 MT of plates and
0.016 MT of pipes, reporting capacity utilisation of 25% and 12%,
respectively, in Q2FY16. Sales volumes for the quarter were at 0.042 MT
of plates and 0.018 MT of pipes. The company has reported an EBITDA
loss of US$ 3.10 million for the quarter.
Project update
JSW Steel had shut down one of its blast furnaces at Vijayanagar for
relining and modification from August 19, 2015. This is expected to be
commissioned in December 2015. The blast furnace at Dolvi also
underwent a shutdown for capacity expansion from October 17, 2015. It is
likely to be commissioned in December 2015. Other ongoing projects are
progressing satisfactorily and are likely to be complete as per schedule.

ICICI Securities Ltd | Retail Equity Research

Page 5

Valuation
JSW Steel reported a mixed Q2FY16 performance wherein while the
performance of subsidiaries came in better than our estimate, the
EBITDA/tonne of the standalone entity came in lower than our estimate.
The EBITDA/tonne of the standalone entity for the quarter was at
| 4908/tonne, lower than our estimate of | 5250/tonne. On account of a
muted EBITDA/tonne and subdued realisations, we have downward
revised our FY16E EBITDA/tonne estimates to | 6000/tonne (from |
6500/tonne earlier) and FY17E EBITDA/tonne to | 7000/tonne (from |
7250/tonne earlier). Subsequently, we downward revise our FY16E
EBITDA by 4.1% and FY17E EBITDA by 1.3%. Going forward, we value
the stock at 6x FY17E EV/EBITDA and arrive at a target price of | 950. We
maintain our HOLD recommendation on the stock.
Exhibit 4: Target price calculation
Particular

Unit

EBITDA (JSW Steel & Ispat Combined)

| crore

Value
10063

EV/EBITDA Multiple

Enterprise Value (EV)

| crore

60376

6.0

Gross Debt

| crore

38885

Cash & Cash Eq

| crore

1472

Net Debt

| crore

37413

Implied Market Cap

| crore

22964

No of Shares

crore

24.2

Target Price

950

Source: Company, ICICIdirect.com Research

Exhibit 5: Valuation Matrix

FY14
FY15
FY16E
FY17E

Sales
(| Crore)
51219.6
52971.5
48445.7
56462.7

Growth
(% YoY)
34.5
3.4
-8.5
16.5

EPS
(|)
89.6
76.3
38.8
78.8

Growth
(% YoY)
50.0
-14.8
-49.1
103.0

PE
(x)
10.1
11.9
23.3
11.5

EV/EBIDTA
(x)
6.1
5.8
7.4
5.9

P/ BV
(x)
1.0
0.9
0.9
0.9

RoNW
(%)
9.9
8.0
3.9
7.5

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 6

RoCE
(%)
10.6
10.3
7.4
9.5

Company snapshot
1,600
1,400

Target Price: 950

1,200
1,000
800
600
400
200

Nov-15

Aug-15

May-15

Feb-15

Nov-14

Aug-14

May-14

Feb-14

Nov-13

Aug-13

May-13

Feb-13

Nov-12

Aug-12

May-12

Feb-12

Nov-11

Aug-11

May-11

Feb-11

Nov-10

Aug-10

May-10

Feb-10

Nov-09

Aug-09

May-09

Source: Bloomberg, Company, ICICIdirect.com Research

Key events
Date
Jan-08

Event
Acquires eight iron ore mines in Chile for a consideration of US$52 million

Mar-08

Government mulls over export tax on steel to curb domestic inflation and ensure supplies of finished steel in domestic markets. Speculation of government
regulating steel prices domestically
Global financial crisis adversely impacts the construction sector and capital spending. Production cuts across the globe to cater to subdued demand

Aug-08
Feb-09

May-10

Global coking coal miners announce price cuts due to demand pressures & weak outlook on steel. The government in its Budget announces excise duty reduction
from 10% to 8% and service tax rate reduction from 12% to 10%
Inks collaborative agreement with JFE Steel Corporation (Japan). Both companies, in principle, agree to collaborate in India in the area of automotive steel, including
production technologies and supply of substrate materials for hot rolled, cold rolled and galvanised products
Acquires coking coal mine in West Virginia, US for a total consideration of US$100 million

Dec-10

Acquires majority stake in Ispat Industries (capacity 3.3 MTPA) for a consideration of | 2157 crore

Nov-09

Mar-11

Coking coal price sky rocket touching highs of US$330/tonne on account of floods in Australia (Queensland)

Jun-11

Iron ore mining ban imposed in Karnataka with NMDC being the only miner allowed to mine under supervision of Supreme Court of India

Dec-11
Feb-12

Mines & Mineral (Development & Regulation) Bill introduced in Parliament. Proposes payment of amount equivalent to royalty for development of the areas in which
the miners operate. Export duty increased to 30% iron ore exports from India
JFE raises stake in JSW Steel to 15%

Sep-12

JSW Steel merges JSW Ispat with itself. Share swap ratio fixed at 1:72 i.e. for every 72 shares of JSW Ispat one would get one share of JSW Steel

Oct-13

Announces a price hike of ~| 2000/ tonne to mitigate the rising input costs (coking coal on account of currency depreciation)

Dec-13
Announces a price hike of ~2% (| 700-1000/tonne) for its steel products effective from January 1, 2014
Source: Company, ICICIdirect.com Research

Top 10 Shareholders
Rank
1
2
3
4
5
6
7
8
9
10

Shareholding Pattern

Name
Jindal Organisation
JFE Steel Corporation
Vividh Consultancy & Advisory Services Pvt. Ltd.
M. M. Warburg Bank (Schweiz) AG
Sahyog Tradecorp Pvt. Ltd.
Danta Enterprises Pvt. Ltd.
Virtuous Tradecorp Pvt. Ltd.
JSW Techno Projects Management, Ltd.
Gagandeep Credit Capital Pvt. Ltd.
Dimensional Fund Advisors, L.P.

Latest Filing Date % O/S

30-Jun-15 19.00
30-Jun-15 15.00
30-Jun-15 5.74
30-Jun-15 5.01
21-Aug-15 4.54
30-Jun-15 2.50
30-Jun-15 2.50
1-Sep-15 2.07
30-Jun-15 1.72
31-Aug-15 1.41

Position (m)
45.9
36.3
13.9
12.1
11.0
6.0
6.0
5.0
4.2
3.4

Change (m)
3.2
0.0
0.0
0.5
0.7
0.0
0.0
5.0
0.0
0.0

(in %)
Sep-14 Dec-14 Mar-15
Promoter
39.6
40.0
40.0
FII
19.9
19.0
19.0
DII
4.1
4.2
4.2
Others
36.5
36.8
36.8

Jun-15
40.4
18.5
5.3
35.8

Sep-15
41.5
17.2
5.2
36.2

Source: Reuters, ICICIdirect.com Research

Recent Activity
Buys
Investor name
JSW Techno Projects Management, Ltd.
Jindal Organisation
Glebe Trading Pvt. Ltd.
Sahyog Tradecorp Pvt. Ltd.
M. M. Warburg Bank (Schweiz) AG

Value
67.77m
43.36m
29.62m
9.19m
6.86m

Shares
4.99m
3.16m
1.72m
0.65m
0.50m

Sells
Investor name
Norges Bank Investment Management (NBIM)
ICICI Prudential Asset Management Co. Ltd.
CPP Investment Board
APG Asset Management
Robeco Institutional Asset Management B.V.

Value
-10.89m
-8.99m
-2.46m
-2.08m
-1.94m

Shares
-0.66m
-0.65m
-0.17m
-0.14m
-0.13m

Source: Reuters, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 7

Financial summary (Consolidated)

Profit and loss statement
(Year-end March)
Total operating Income
Growth (%)
Raw Material Expenses
Employee Expenses
Power and Fuel Costs
Mfg and Other expenses
Total Operating Expenditure
EBITDA
Growth (%)
Depreciation
Interest
Other Income
PBT
Exceptional Item
Total Tax
Reported PAT Before MI
Profit/(loss) - JV/MI/Associate
Reported PAT After MI
Growth (%)
Adj PAT after MI
Adj 'EPS (|)

(| crore)
FY14
51,219.6
34.5
30,334.0
1,298.2
3,813.3
6,608.6
42,054.2
9,165.5
40.9
3,182.6
3,047.9
85.8
3,020.8
-1,712.8
920.1
388.0
64.0
451.9
-53.1
2,164.7
89.6

FY15
52,971.5
3.4
29,686.0
1,532.8
4,123.1
8,227.3
43,569.2
9,402.3
2.6
3,434.5
3,493.0
111.4
2,586.2
-47.1
819.4
1,719.7
76.9
1,796.6
297.5
1,843.7
76.3

FY16E
48,445.7
-8.5
27,421.1
1,648.6
3,937.3
7,260.3
40,267.3
8,178.5
-13.0
3,459.2
3,436.7
124.8
1,407.4
-2.2
538.6
866.7
69.2
935.9
-47.9
938.0
38.8

FY17E
56,462.7
16.5
32,813.7
2,008.8
4,436.5
7,140.9
46,399.9
10,062.7
23.0
3,947.9
3,556.3
140.0
2,698.5
0.0
809.6
1,889.0
15.6
1,904.5
103.5
1,904.5
78.8

Cash flow statement

(Year-end March)
Profit after Tax
Add: Depreciation
(Inc)/dec in Current Asset
Inc/(dec) in CL&Provisions
Others
CF from operating activities
(Inc)/dec in Investments
(Inc)/dec in Fixed Assets
Others
CF from investing activities
Issue/(Buy back) of Equity
Inc/(dec) in loan funds
Dividend paid & dividend tax
Inc/(dec) in Sec. premium
Others
CF from financing activities
Net Cash flow
Opening Cash
Closing Cash

(| crore)
FY14
451.9
3,182.6
-2,901.2
-2,517.7
1,073.3
-711.0
-74.8
-7,920.7
-79.1
-8,074.6
0.4
7,496.0
-339.0
667.9
-30.2
7,795.2
-990.4
1,653.4
663.0

FY15
1,796.6
3,434.5
-2,831.3
6,367.0
766.0
9,532.8
63.5
-7,406.8
-311.9
-7,655.1
0.0
122.8
-339.0
-341.8
-69.4
-627.4
1,250.3
663.0
1,913.2

FY16E
935.9
3,459.2
-2,029.6
-2,454.1
0.0
-88.6
-50.0
-5,200.0
50.0
-5,200.0
-0.4
5,100.0
-339.0
341.8
0.0
5,102.4
-186.3
1,913.2
1,727.0

FY17E
1,904.5
3,947.9
-1,467.9
3,514.3
0.0
7,898.8
-50.0
-6,715.0
50.0
-6,715.0
0.0
-1,100.0
-339.0
0.0
0.0
-1,439.0
-255.2
1,727.0
1,471.7

Source: Company, ICICIdirect.com Research

Source: Company, ICICIdirect.com Research

Balance sheet

(| crore)

(Year-end March)
Liabilities
Share Capital
Reserve and Surplus
Total Shareholders funds
Total Debt
Deferred Tax Liability
Minority Interest / Others
Total Liabilities

FY14

FY15

FY16E

FY17E

1,067.2
20,871.1
21,938.3
34,761.9
2,123.4
1,136.6
59,960.1

1,067.2
21,986.9
23,054.1
34,884.6
3,154.7
778.9
61,872.3

1,066.8
22,925.5
23,992.3
39,984.6
3,154.7
828.9
67,960.5

1,066.8
24,491.1
25,557.8
38,884.6
3,154.7
878.9
68,476.0

Assets
Gross Block
Less: Acc Depreciation
Net Block
Capital WIP
Total Fixed Assets
Investments
Inventory
Debtors
Loans and Advances
Other Current Assets
Cash
Total Current Assets
Current Liabilities
Provisions
Total Current Liabilities
Net Current Assets
Others Assets
Application of Funds

65,710.4
21,224.5
44,485.9
10,398.0
54,883.9
662.7
8,155.1
2,292.4
9,403.4
17.5
663.0
20,531.5
17,317.4
362.5
17,679.9
2,851.6
1,561.9
59,960.1

74,810.4
24,659.0
50,151.5
8,704.7
58,856.2
599.3
11,009.0
2,499.8
8,922.9
268.2
1,913.2
24,613.1
23,690.6
356.3
24,046.9
566.2
1,850.6
61,872.3

80,010.4
28,118.2
51,892.2
8,704.7
60,597.0
649.3
10,893.3
2,389.1
11,178.9
268.2
1,727.0
26,456.4
21,236.5
356.3
21,592.8
4,863.7
1,850.6
67,960.5

83,810.4
32,066.1
51,744.3
11,619.7
63,364.0
699.3
12,765.9
2,784.5
10,428.9
218.2
1,471.7
27,669.1
24,750.8
356.3
25,107.0
2,562.1
1,850.6
68,476.0

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Key ratios
(Year-end March)
Per share data (|)
Adj EPS
Cash EPS
BV
DPS
Cash Per Share
Operating Ratios (%)
EBITDA Margin
PBT / Total Operating income
PAT Margin
Inventory days
Debtor days
Creditor days
Return Ratios (%)
Adj RoE
Adj RoCE
RoIC
Valuation Ratios (x)
P/E
EV / EBITDA
EV / Net Sales
Market Cap / Sales
Price to Book Value
Solvency Ratios
Debt/EBITDA
Debt / Equity
Current Ratio
Quick Ratio

FY14

FY15

FY16E

FY17E

89.6
150.4
907.6
11.0
27.4

76.3
216.4
953.8
11.0
79.2

38.8
181.8
992.6
11.0
71.4

78.8
242.1
1,057.3
11.0
60.9

17.9
5.9
0.9
98
16
123

17.7
4.9
3.4
135
17
163

16.9
2.9
1.9
145
18
160

17.8
4.8
3.4
142
18
160

9.9
10.6
10.7

8.0
10.3
10.7

3.9
7.4
7.6

7.5
9.5
9.7

10.1
6.1
1.1
0.4
1.0

11.9
5.8
1.0
0.4
0.9

23.3
7.4
1.2
0.5
0.9

11.5
5.9
1.1
0.4
0.9

3.8
1.6
1.2
0.7

3.7
1.5
1.0
0.6

4.9
1.7
1.2
0.7

3.9
1.5
1.1
0.6

Source: Company, ICICIdirect.com Research

Page 8

ICICIdirect.com coverage universe (Metals & Mining)

CMP
Company
Coal India
Hindalco Industries
Hindustan Zinc

(|)

M Cap
TP (|) Rating

(| Cr)

EPS (|)

P/E (x)

FY15

FY16E

FY17E

EV/EBITDA (x)

FY15 FY16E FY17E

ROCE(%)

FY15 FY16E FY17E

ROE(%)

FY15 FY16E FY17E FY15 FY16E FY17E

360

425

Buy

227389

21.7

23.7

28.7

15.6

14.3

11.8

9.9

8.2

6.5

34.0

36.5

40.8

35.7

39.9

87

85

Hold

17914

13.5

3.4

9.2

6.1

24.0

9.0

7.9

8.9

6.9

5.0

3.8

5.3

2.2

1.8

43.4
4.7

158

170

Hold

66755

19.4

18.4

18.9

8.3

8.7

8.5

5.0

4.9

4.4

15.6

13.1

12.3

18.9

16.2

15.2

JSW Steel

891

950

Hold

21529

76.3

38.8

78.8

11.9

23.3

11.5

5.8

7.4

5.9

10.3

7.4

9.5

8.0

3.9

7.5

NMDC

104

100

Hold

41137

16.2

10.1

11.0

6.1

9.7

8.9

2.6

4.9

5.3

23.6

12.9

14.1

19.9

12.0

12.4

SAIL

56

55

Hold

23131

5.1

1.1

5.2

9.3

44.2

9.0

10.1

11.6

5.9

4.0

2.6

5.8

4.9

1.0

4.9

Vedanta

108

135

Hold

32066

19.8

16.9

22.6

6.6

7.7

5.8

4.8

5.0

4.4

11.3

10.0

10.7

11.8

10.3

11.1

Tata Steel

240

260

Hold

23314

NM

20.0

23.0

NM

12.0

10.4

7.5

7.8

6.3

5.8

5.3

6.9

0.0

5.6

6.3

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 9

RATING RATIONALE

ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns

ratings to its stocks according to their notional target price vs. current market price and then categorises them
as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional
target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;

Pankaj Pandey

Head Research

pankaj.pandey@icicisecurities.com

ICICIdirect.com Research Desk,

ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai 400 093
research@icicidirect.com

ICICI Securities Ltd | Retail Equity Research

Page 10

Disclaimer
ANALYST CERTIFICATION

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about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.

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ICICI Securities Ltd | Retail Equity Research

Page 11