{"id":2178,"date":"2021-08-30T11:51:50","date_gmt":"2021-08-30T11:51:50","guid":{"rendered":"http:\/\/www.assetmultiplier.co.in\/blog\/?p=2178"},"modified":"2021-08-30T12:40:00","modified_gmt":"2021-08-30T12:40:00","slug":"strong-tailwinds-for-steel-production-in-india-jindal-steel-and-power","status":"publish","type":"post","link":"https:\/\/www.assetmultiplier.co.in\/blog\/2021\/08\/30\/strong-tailwinds-for-steel-production-in-india-jindal-steel-and-power\/","title":{"rendered":"Strong tailwinds for Steel production in India &#8211; Jindal Steel and Power"},"content":{"rendered":"<p><b>Update on Indian Equity Market:<\/b><\/p>\n<p><span style=\"font-weight: 400;\">On Monday, markets ended at an all-time closing high with Nifty closing 226 points higher to close at 16,931. BHARTIARTL (5.0%), DIVISLAB (4.2%), and AXISBANK (4.0%) were the top gainers on the index while TECHM (-1.4%), NESTLEIND (-1.1%), and EICHERMOT(-1.1%) were the top losers for the day. Among the sectoral indices,\u00a0 METAL\u00a0 (2.5%), PSU BANK (2.0%), and BANK (2.0%) were the top gainers, while IT (-0.6%) was the only laggard.<\/span><\/p>\n<p><strong><span style=\"text-decoration: underline;\">Excerpts of the Interview with Mr. VR Sharma, Managing Director at Jindal Steel and Power Ltd on Economic Times, dated 24th August 2021:<\/span><\/strong><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The steep fall in Iron Ore prices has lifted the market spirits across the world. However, that hasn\u2019t translated to a fall in steel prices due to stiffness in coking coal prices and high input costs for other ferrous metals.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The lower iron prices aided by a $1000\/MT steel price in international markets are translating into improved gross margins for producers, and the market will likely stabilise at these levels.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">India has to reach a level of about 300 million tonnes by 2030. In nine years, it may be producing about 300 million tonnes of steel and consuming the same quantity.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Overnight it is very difficult to build up capacities. Building up capacities takes about three to four years, all-steel producers are bullish about India\u2019s prospects, and a Rs. 2 tn investment is expected to be made over the next 5 years.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The sector is showing healthy growth and the demand has already begun to pick up, the company expects the entire steel sector to shine in the upcoming years.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Steel demand will continue because infrastructure projects are in offing and there are a lot many projects on the table now. The construction sector is booming and the shipbuilding sector, defence sector, and the oxygen cryogenic plants are increasing in terms of number.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Headwinds such as adverse Chinese Steel Policy, logistical bottlenecks, Covid induced supply disruptions have led to coking coal prices being inflated. This is putting pressure on steel prices which are not expected to recover in the short term.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The industry expects to shift from coking coal to indigenous coal, which is both cost friendly and environment friendly and offers protection from such price shocks.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The Chinese steel industry has seen a\u00a0 dip in production and consequently exports, being the second-largest steel producer, India is well poised to take the benefits of\u00a0 Chinese fallback,<\/span><\/li>\n<\/ul>\n<p><b>Asset Multiplier Comments:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The cyclical recovery in the steel sector may have finally arrived. With the tailwinds for this industry, it is likely to grow fast over new capex and recovery cycle for the decade.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Jindal Steel and Power is one of the largest steel producers in India. It is well poised to reap the benefits of scale and the tailwinds. It is likely to deliver great value to its shareholders.<\/span><\/li>\n<\/ul>\n<p><b>Consensus Estimates (Source: market screener website):\u00a0<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The closing price of Jindal Steel and Power was \u20b9 379\/- as of 30-August-2021.\u00a0 It traded at 7x\/5x the EPS estimate of \u20b956\/\u20b9 77\u00a0 for FY22E\/23E.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The consensus price target is \u20b9 538\/- implies a PE multiple of 7x on FY23E EPS of \u20b9 77\/-.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Disclaimer: &#8220;The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.&#8221;<\/span><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Update on Indian Equity Market: On Monday, markets ended at an all-time closing high with Nifty closing 226 points higher to close at 16,931. BHARTIARTL (5.0%), DIVISLAB (4.2%), and AXISBANK (4.0%) were the top gainers on the index while TECHM (-1.4%), NESTLEIND (-1.1%), and EICHERMOT(-1.1%) were the top losers for the day. Among the sectoral [&hellip;]<\/p>\n","protected":false},"author":12,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[403],"tags":[537,391,230],"_links":{"self":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/2178"}],"collection":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/comments?post=2178"}],"version-history":[{"count":3,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/2178\/revisions"}],"predecessor-version":[{"id":2182,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/2178\/revisions\/2182"}],"wp:attachment":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/media?parent=2178"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/categories?post=2178"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/tags?post=2178"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}