JSPL falls 9% in two-days on disappointing Q4 results

Higher iron ore cost and higher operating cost led to operating margins slipping by 730bps yoy to 23.7%.

Jindal Steel and Power Limited (JSPL) has dipped 5% to Rs 299, extending its Friday’s 4% fall after reporting a 35% year-on-year (yoy) drop in its consolidated net profit at Rs 753 crore for the quarter ended March 2013 (Q4) due to sharp fall in sales realisation. The company had profit of Rs 1,162 crore in a year ago quarter.

Net sales during the reported quarter grew marginally by 2% yoy at Rs 5,583 crore on account of soft commodity prices. Moreover, the company's interest burden during Q4 rose by almost two-fold to Rs 239 crore from Rs 129 crore over the previous year.

Management indicated that higher iron ore cost from Sarda mines and higher operating cost due to operation of plate mill coupled with low realizations led to operating margins slipping by 730bps yoy to 23.7%.

Meanwhile, analyst at Dolat Capital maintain a Reduce on JSPL with a price target of Rs 318 on report dated Apri 26, given the regulatory uncertainty, weak steel prices and weaker return profile of the new projects.

The stock opened at Rs 316 and hit a low of Rs 298, its lowest price since May 2009 on BSE. A combined 4.7 million shares have changed hands on the counter till 1317 hours on BSE and NSE.