JSPL: Reduction in net debt expected to drive re-rating, say analysts

Rising volumes, expanded capacities, operating leverage, better realisation and debt reduction to aid earnings

It is no secret that improving demand and realisations are boosting prospects of steel players. But, for Jindal Steel & Power (JSPL), additional benefits are accruing from completed expansions and operating leverage, which — along with efforts on backward integration and debt reduction — are keeping sentiment firm. Not surprising, the stock, which has trebled from April lows, added 5.6 per cent on Tuesday.

For the September quarter (Q2; results declared last Friday), JSPL’s domestic steel volumes surged 23 per cent sequentially and 29 per cent year-on-year (YoY) to 1.93 million tonne (mt). With blended realisations rising by Rs 1,200 sequentially