Jindal Steel & Power Limited Q3 FY22 Earnings Conference Call Insights

Key highlights from Jindal Steel & Power Limited (JINDALSTEL) Q3 FY22 Earnings Concall

Management Update:

• JINDALSTEL commented that it will be ending up FY22 by producing 118 million tonnes steel in the country. And out of that, about 12 million tonnes will be exports, and 102 million to 104 million tonne will be consumed within the country.

Q&A Highlights:

• Ashish Kejriwal from Centrum Broking asked if the company is seeing a substantial jump in Feb. volume for domestic market. V R Sharma MD said the company is seeing it already because government is banked upon investing in infrastructure, which is a very good sign.

• Sumangal Nevatia from Kotak Securities asked about capex guidance. V R Sharma MD said that except for the Kasia mine capex there is no capex in FY22 of more than INR800 crore. JINDALSTEL said it will be spending INR18,500 crore in another 3 years time, which is well within the business plan to reach to a level of 15 million tonnes steel company by 2024.

• Kirtan Mehta of BOB Capital Markets asked about the usage of EBITDA during 3Q22. Nishant Baranwal IR said that the EBITDA standalone was INR3,168 crores. And as with allocations, prepaid loan were about INR970 crores; the interest outgo was close to INR470 crores; tax outgo was of INR 800 crores; capex of about INR 500 crores; cassia INR870 crores; and working capital of INR450 crore.

• Kirtan Mehta of BOB Capital Markets also asked about the pellet plant and the intermediate milestones in terms of what has been done so far and next milestones to be tracked. V R Sharma MD said that the company has two pellet plants in Barbil and both are running at fullest capacity. JINDALSTEL is also adding one more pellet plant in Angul, which will suffice the need of Angul plant by 50%. Oct. 2022 is the deadline to start the pellet plant in Angul and expects the benefit to come to balance sheet by 4Q22.

• Prashanth Kota of Dolat Capital asked about the quality and grade of coking coal that the company produces. V R Sharma MD said the company does not sell coking coal to other parties. And as for grade, it is similar to any other mine for prime hard and hard coking coal, which are those who are mining in Australia, the same grade.

• Prashanth Kota of Dolat Capital also asked about the volume expectation in FY23; volume from all the three mines? V R Sharma MD replied that coal volume from all the three plants, the company should have about 1.2-1.4 million tonnes, which is what JINDALSTEL has taken into its business plan. It may go up.

• Bhavin Chheda from ENAM Holdings enquired about the cost of production achieved at the Australia coking coal mines in 3Q22 and how JINDALSTEL is planning to reduce that cost going forward. Nishant Baranwal IR replied that the company is close to 60,000 to 70,000 tonnes per month producing right now. And at present cost, the aim is that by March and April, the company should get to 110,000 per month, at about $84 costing for unwashed.

• Bhavin Chheda from ENAM Holdings also asked about capex plan, if the run rate would be less than the earlier expectation. Nishant Baranwal IR said that the company had guided towards a INR2,400 crore capex for this year and JINDALSTEL expects it to be below that is what it’s envisaging.

• Ritesh Shah from Investec asked about the trend on the export realizations and if exports are as lucrative as domestic sales. V R Sharma MD replied that looking at today’s market the export realization is about $50 per tonne higher than the domestic market.

• Ritesh Shah from Investec also enquired about the cost increase on a sequential basis. V R Sharma MD  said that the company feel that the cost in this particular quarter is not likely to increase because of the contracts done and knowing where the prices will move. And hereafter, JINDALSTEL is not seeing any increase in terms of coking coal or energy prices because the world is struggling like anything.