Jindal Steel & Power having posted flat Q4 FY21 numbers, has courage to post a misleading press release. Such press releases were seen in the past from ADAG, which throws caution to see such futuristic rosy releases now from JSPL.

“JSPL 2.0 Vision: Only Indian Steel Company with Net Debt Free Balance Sheet” is the Heading of the press release. In Body of release, Point 1 says, “JSPL 2.0: Next Phase of Growth - The core focus right now is to sweat out assets and make JSPL Net Debt free.” So, Debt free is wish and not the reality, while peers will also sweat out their assets and will not preserve as a Painting on Wall.   

Company and Promoters having chequered history, with present debt of over Rs. 20,000 crore, with PAT of Rs. 4,267 crore for FY21, feels that investors are fool to accept this vision. Promoters forget that such chunky vision can only cause damage to the share price. Press release, released on 12th May evening, already made share to fall by Rs.40 on 14th May (13th May, market were closed) and by about Rs. 85 in the week ended 14th May. Now share has partly recovered, due to renewed buying seen in metals stocks for last 2 days.

JSPL, now ruling at sub Rs. 440, with present mcap of Rs. 43k cr and net Debt of Rs. 20k cr. Thus an EV of Rs. 63K cr, on a Steel production of 7.5 MTPA seen in FY21, translates in a per tonne EV of Rs. 84,000 per MT.

Conversely, SAIL  having Mcap of Rs. 53k cr and expected net Debt of Rs. 22k cr, (Q4 numbers are yet to be seen, expected to be better) with estimated Steel production of 15 MTPA in FY21, is translating in an EV of Rs.50,000 per MT. Market on realisng this, can make share of JSPL to correct again below Rs. 380 in the next  month, as stock is seen most expensive, with discomfort on promoter, while stock is also seen in an overbought zone, but informed may hold pice till may series expiry.

Sincere advice to JSPL, its Promoters and Executive - Stop Kite flying and stop thinking that Investors and market are Fool or Novice or a Child. Also  remember the fate of ADAG.

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