Jayaswal Neco, having 1 MTPA Steel Plant, has posted extremely good Q4 FY21 numbers, which can only be assessed on analysing it rationally. Infact, this hints of company, due to report an EPS of over Rs.10 for FY 22, from its normal operations, excluding exceptional gain of about Rs. 2,000 crore, likely to get booked in FY 22.   

Q4 PBT is at Rs. 68 cr, which has been contributed by its main segment Steel, with an EBIT of Rs. 313 cr. against an EBIT of Rs. 186 cr of Q3 FY21. This can comfortably get extrapolated for FY22, by multiplying it by 4x, hinting at an EBIT of Rs. 1,250 cr. for FY22. Finance cost in FY21 was at Rs. 909 cr, which can fall to Rs. 450 cr in FY22, with fall in interest rate to 9% (presently at 13.1%), as also on lower amount, post settlement with ARC. With no income tax liability seen for FY 22, PAT is estimated at Rs. 750 cr. on an equity of Rs. 639 cr, which translates in an EPS of Rs. 11.70.

Present debt exposure of the company is at Rs. 7,000 cr, with normal LT Debt of Rs. 1,900 cr and working capital finance of Rs. 1,400 cr. Default loan of Rs. 3,640 cr, of 12 banks were totally bought by ACRE, an ARC, which can be settled with ARC  for Rs. 1,600 cr, giving an exceptional gain of over Rs. 2,000 cr. Company in Note No. 5 to accounts have stated- “ACRE continues to support the operations of the Company. The Company is in final stages of restructuring of its outstanding debt with its lenders”.

Company seen turning from sick to healthy, with sharp improvement to be seen in financials and margins in FY22.
Promoter stake of 69% and about 19% held by the circles close to promoter, leaves float at 12% only, largely held by 35,000 shareholders.
This is seen the most bullish factor ahead.

This is not a buy recommendation, while stock recommendations are provided exclusively to our paid members in the Member Zone.