Equity dilution concerns may weigh on JSPL; earnings prospects remain firm

Earnings prospects remain firm, given operational turnaround and start of new capacities

Jindal Steel and Power (JSPL), which saw its stock price more than double in the past year, led by a turnaround in performance and completion of a major capacity expansion, is now in the news due to debt reduction initiatives. 

Its board of directors met on Friday and gave a nod to raise equity through a Qualified Institutional Placement (QIP). While the move is positive and will help reduce debt, the details haven’t been spelt out. 
 

Since the extent of equity dilution and whether it will be at a premium or discount to the current market price is not known,