CMP: INR67 TP: INR75(+13%) Neutral

Transcription

1 BSE SENSEX S&P CNX 25,102 7,707 Bloomberg JSP IN Equity Shares (m) M.Cap.(INRb)/(USDb) 60.9 / Week Range (INR) 148 / 48 1, 6, 12 Rel. Per (%) 6/-5/-45 Avg Val, INRm/ Vol m 826 Free float (%) 38.1 Financials & Valuations (INR b) Y/E Mar E 2018E Net Sales EBITDA PAT EPS (INR) Gr. (%) BV/Sh (INR) RoE (%) RoCE (%) P/E (x) P/BV (x) Estimate change TP change Rating change Quarterly Performance (Consolidated) 4 May QFY16 Results Update Sector: Metals Jindal Steel & Power CMP: INR67 TP: INR75(+13%) Neutral Operating performance improves in 4QFY16 Terms of EUP1 sale to JSW Energy unfavorable In 4QFY16, Jindal Steel & Power s (JSPL) consolidated EBITDA increased by 63% QoQ to INR9b, driven by a stronger performance of the standalone business (JSPsa), Oman and a decline in losses at its overseas mines. Jindal Power Ltd. (JPL) disappointed in the quarter by reporting lower margins. Interest cost increased by 6% QoQ to INR8.6b. Depreciation rose sharply by 47% QoQ to INR9.3b, due to a change from SLM to WDV for power assets. Loss before tax declined by 15% QoQ to INR6.8b. JSPsa s EBITDA increased by 59% QoQ to INR6.7b, driven by a growth of 36% in steel sales to 1mt and 62% in pellet sales to 290kt, lower raw material costs, and operating leverage. EBITDA/t improved by 44% QoQ from INR6357 despite falling realization. JPL disappointed in the quarter by reporting lower margins and volume. EBITDA declined by 27% QoQ to INR1.4b. Depreciation increased by INR4b QoQ to INR5.3b due to a change from SLM to WDV in order to align with other assets. JSPL announced the signing of a binding agreement with JSW Energy to sell JPL s EUP1 (1000MW) latest by 30th June The consideration will vary between INR40b to INR65b, depending upon the signing of PPAs. JSPL will receive only interest bearing advance of INR5b, subject to the shareholders approval. This is unlikely to reduce the stress on JSPL s balance sheet as the payments are far in the future. If EUP1 gets PPAs, then JSPL will be better off without selling it, in our view. We are raising our margin estimate for the steel business by INR800/t in view of the recovery in Indian steel prices and the company s cost reduction. JPL s earnings are likely to improve after the commencement of power supply to Kerala PPAs. The merchant power market has also improved recently. We are also raising our consolidated EBITDA estimate for FY17E from INR42.6b to INR46.2b. Net debt stands at 13.4xFY16. Maintain Neutral. Y/E March FY15 FY16 FY15 FY16 FY16 vs Est 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 4QE (%) Net Sales 49,784 53,738 51,643 47,082 47,527 50,402 45,949 50, , ,673 47,591 7 Change (YoY %) EBITDA 16,290 16,400 14,248 7,896 10,176 9,765 5,504 8,965 54,835 34,410 7, Change (YoY %) As % of Net Sales Interest 5,355 5,986 7,024 7,709 8,516 7,647 8,061 8,584 26,073 32,808 8,156 5 Depreciation 6,671 6,503 7,147 7,007 7,466 5,005 6,378 9,346 27,328 28,194 6, Other Income ,047 2,256 2, PBT (before EO item) 5,168 4, ,211-5,055-2,532-8,885-7,918 3,689-24,391-7, Extra-ordinary Income , , ,126-19,116-2,358 0 PBT (after EO item) 5,168 4,312-18,131-6,776-5,055-6,927-7,976-6,792-15,427-26,750-7,121-5 Total Tax 1, , , ,120-3, , % Tax Reported PAT 4,016 4,001-16,751-5,812-3,555-6,945-5,855-3,631-14,545-19,987-7, MI - Loss/(Profit) , Associate Adjusted PAT 4,181 4,419 2,364-4,628-3,393-1,785-6,645-4,840 6,336-16,662-6, Sanjay Jain (SanjayJain@MotilalOswal.com); Dhruv Muchhal (Dhruv.Muchhal@MotilalOswal.com); Investors are advised to refer through important disclosures made at the last page of the Research Report. Motilal Oswal research is available on Bloomberg, Thomson Reuters, Factset and S&P Capital.

2 Terms of EUP1 sale to JSW Energy are unfavorable JSPL announced signing of binding agreement with JSW Energy to sell JPL s EUP1 (1000MW) latest by 30 th June The consideration will vary between INR40b & INR65b and net working capital depending upon signing of PPAs. In the near term, JSPL gets only interest bearing INR5b advance that too after the approval of majority of minority shareholders because it is a related party transaction. This is unlikely to solve stress on balance sheet of JSPL because the key payments are far in future. If EUP1 gets PPAs, JSPL will be better off not selling it, in our view. JSW Energy claims that INR65b valuation is subject to securing PPAs with minimum RoE equal to regulated returns i.e. 15.5%. According to our calculations, EUP1 should be generating EBIT of INR9.6b assuming that the acquisition cost of INR65b is funded by 75% debt with 12% interest rate. If EUP1 is able to generate INR9.6b of EBIT, JSPL will be able to service debt of INR80b at interest cost of 12%. Even after that, it will be left with some cash flows equivalent to depreciation for repaying debt. Therefore, JSPL will be worse off by selling it for INR65b. If EUP1 doesn t get PPAs, payments are far into future If we assume that JSPL is not able to secure PPAs for EUP1, the sale consideration will be only INR40b. This would not have been a bad deal if the payments were front loaded, which would have helped JSPL reduce balance sheet stress and recurring interest burden of INR4.4b. Exhibit 1: EBIT calculation under regulated return model for EUP1 at INR65b valuations P&L INR m Remarks EBIT 9,609 Int. 5,850 75% debt funding@12%int. PBT 3,759 Tax 1,241 Rate(%) 33 PAT 2,519 25% equity funding@15.5% expected return Source: MOSL 4 May

3 4QFY16 Results Analysis Standalone: Steel margin improve on operating leverage Steel sales were up 36% QoQ (+28% YoY) to 1,010kt. The rebar mill of 1.4mtpa is in the final stages of completion. Commissioning of the mill has been delayed from 4QFY16 earlier to 1HFY17. Steel production was up 24% QoQ / 20% YoY to 970kt. Implied realization was however down 11% QoQ to ~INR31,000/t, driven by weaker product mix, in our view. Exhibit 2: Standalone steel sales xx Steel product sales Steel product production 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY Source: MOSL, Company JSP sold 289kt pellet in the quarter, up from 179kt in 3Q taking benefit of lower iron ore prices. EBITDA increased to INR3.2b from INR0.3b in 3Q on lower raw material cost and other expenses. Staff cost was back to normalized level of INR1.7b v/s. INR0.4b in 3Q. Other expenses were down from ~INR4.6b in 3Q to ~INR3.7b in 4Q on foreign exchange gain excluding which it were flat QoQ. Exhibit 3: Quarterly Performance (Standalone) (INR Million) Y/E March FY15 FY16 FY15 FY16 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Sales volume Steel (000 tons) ,010 2,930 3,380 Pellets (000 tons) CPP (M kwh) ,812 1,554 Jindal Power (M kwh) 2,134 2,603 2,510 2,463 1,716 2,496 2,361 2,158 9,710 8,730 Net Sales 35,839 34,276 36,606 34,617 34,527 34,964 31,763 36, , ,865 Change (YoY %) EBITDA 11,920 11,027 10,259 6,222 7,104 6,331 4,230 6,727 39,427 24,392 As % of Net Sales Interest 4,283 4,472 5,549 6,415 6,909 6,756 6,583 6,459 20,719 26,708 Depreciation 4,155 4,440 4,593 4,668 5,010 2,488 3,940 3,483 17,856 14,921 Other Income PBT (before EO item) 3,700 2, ,588-4,276-2,823-6,283-3,215 1,684-16,597 Extra-ordinary Income 0 0-7, ,078 0 PBT (after EO item) 3,700 2,367-7,667-4,795-4,276-2,823-6,283-3,215-6,394-16,597 Total Tax ,448-1, ,262-1,757-3,287-6,409 % Tax Reported PAT 3,063 2,873-6,696-2,346-2,673-2,037-4,021-1,458-3,107-10,189 Adjusted PAT 3,063 2,873 1,175-2,140-2,673-2,037-4,021-1,458 4,971-10,189 Change (YoY %) Source: MOSL, Company 4 May

4 Jindal Power: vols. and realization decline Gross commercial generation was down 9% QoQ to 2,358MU. PLF was down 300bps QoQ to 32%. Blended realization declined 6% QoQ to INR3.25/kWh as higher realization on TN sales was offset by weak spot market prices. EBITDA/kWh declined 20% QoQ from INR0.8 in 3Q to INR0.6 in 4Q. JPL did not see any significant benefit from lower e-auction coal prices partly due to lower volumes. JPL has changed the method of depreciation for its plant and machinery from straight line method to written down value basis, for assets commissioning after May 2011 (as per a notification of Companies Act). This has resulted in depreciation for the quarter being higher by INR40b to INR5.3b. Exhibit 4: Jindal Power s quarterly performance INR million Y/E March FY15 FY16 FY15 FY16 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Capacity 2,800 2,800 2,800 2,800 3,400 3,400 3,400 3,400 2,800 3,400 PLF 40% 46% 44% 44% 25% 37% 35% 32% 40% 31% Gross generation (MU) 2,446 2,799 2,699 2,692 1,875 2,728 2,580 2,358 9,932 9,218 Est. Power sales (MU) 2,134 2,603 2,510 2,463 1,716 2,496 2,361 2,158 8,969 8,852 Net Sales 7,020 9,270 8,250 7,740 6,100 8,890 8,150 7,010 32,280 26,701 (INR/kwh) Change (%) EBITDA 4,270 5,220 4,140 3,350 1,700 1,680 1,860 1,360 16,980 7,599 (INR/kwh) Reported PAT 1,950 2,950-7, ,120-1,360-1,106 Source: Company, MOSL Global Ventures: Oman improves on better steel prices Oman steel sales volumes increased from 250kt in 3Q to 400kt in 4Q. Along with higher steel price realization EBITDA was up from ~INR0.5b in 3Q to ~INR0.9b in 4Q. The 1.4mtpa bar mill was commissioned in March 2016 and is expected to start production in 1QFY17. Other overseas businesses were EBITDA break-even, as against a loss of ~INR1b in 3Q. South African operations were better while curtailed Mozambique operations resulted in lower losses. Update estimates on higher steel prices We are raising margins for steel business by INR800/t in view of recovery in Indian steel prices and cost reduction. JPL s earnings are likely to improve on start of power supply to Kerala PPAs. Merchant power market too has improved recently. Consolidated EBITDA is increased from INR42.6b to INR46.2b for FY17E. Net debt is 13.4x FY16. Maintain Neutral 4 May

5 Story in charts Exhibit 5: Crude steel production set to increase.. Exhibit 6: India business EBITDA stable Crude steel capacity - mt Steel EBITDA/t (Standalone) EBITDA/t of HBI (Shadeed) ,733 15,872 12,747 12,646 7,216 7,242 7,252 5,096 2,936 3,226 2,318 2,688 2,026 2,042 FY12 FY13 FY14 FY15 FY16 FY17E FY18E Source: Company, MOSL FY12 FY13 FY14 FY15 FY16 FY17E FY18E Source: Company, MOSL Exhibit 7: Pellet sales to decline Pellet sales - kt 1,995 2,112 2, FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E Source: Company, MOSL Exhibit 8: Debt will continue to rise FCF - INR b Capex - INR b FY12 FY FY14 FY15 FY16 FY17E FY18E Source: Company, MOSL Exhibit 9: Asset based valuation Business Realizable market value if there is a buyer Remarks (for Market value) (INR m) A. Steel 299,814 EBITDA/t EBITDA Multiple Raigarh 7,000 21, x 136,500 Non-integrated mills' normalized margins Angul Steel 7,000 10, x 68,250 CWIP 35, acre land and infrastructure (inseparable) Shadeed, Oman 4,000 6, x 39,000 Overseas mining 0 high cost assets are now loss making Tensa iron ore mines 1,000 3,000 20,433 Mine leases for 15 years; 12% discounting B. Power 212,413 INR m/mw Tamnar ,143 Replacement cost Total EV 511,957 Less: Net debt 443,617 Equity Value 68,340 Equity value (INR/share) 75 Source: MOSL, Company 4 May

6 Financials and Valuations Jindal Steel & Power Income Statement (INR Million) Y/E Mar E 2018E Net Sales 131, , , , , , , ,383 Change (%) EBITDA 63,162 68,868 65,685 57,764 54,598 34,410 46,184 50,262 EBITDA Margin (%) Depreciation 11,510 13,865 15,392 18,292 27,328 28,194 26,233 26,191 EBIT 51,652 55,003 50,293 39,472 27,270 6,216 19,951 24,071 Interest 2,596 3,600 7,582 15,008 25,837 32,808 34,843 34,163 Other Income 815 1,419 1, ,256 2, Extraordinary items , ,116-2, PBT 49,871 51,886 38,335 25,120-15,428-26,750-14,529-10,290 Tax 11,830 11,863 9,218 6, , Tax Rate (%) Min. Int. & Assoc. Share , ,667-1,679 Reported PAT 37,539 39,649 29,101 19,104-12,781-19,020-13,109-8,319 Adjusted PAT 37,539 40,585 34,842 19,104 6,335-16,662-13,109-8,319 Change (%) Balance Sheet (INR Million) Y/E Mar E 2018E Share Capital Reserves 140, , , , , , , ,129 Net Worth 141, , , , , , , ,044 Minority Interest 2,335 3,071 5,573 10,802 8,573 7,592 5,926 4,246 Debt 139, , , , , , , ,007 Deferred Tax 10,055 11,920 13,365 14,727 20,185 20,185 20,190 20,196 Total Capital Employed 293, , , , , , , ,493 Gross Fixed Assets 192, , , , , , , ,425 Less: Acc Depreciation 44,321 58,360 74, , , , , ,904 Net Fixed Assets 148, , , , , , , ,521 Capital WIP 93, , , ,112 90,728 79,351 89,138 89,138 Goodwill on consolidation 1, ,543 5,930 5,485 5,485 5,485 5,485 Investments 2,979 3,776 8,089 3,418 17,852 17,852 17,852 17,852 Current Assets 114, , , , , , , ,577 Inventory 27,734 35,795 45,242 48,812 48,487 46,744 50,063 51,745 Debtors 11,537 13,068 19,541 17,724 16,907 17,738 19,417 19,852 Cash & Bank 4,640 1,492 2,001 10,153 11,391 19,017 24,743 22,411 Loans & Adv, Others 70,737 93, , , , , , ,568 Curr Liabs & Provns 67,668 83,066 93, ,405 61,181 66,400 67,578 70,078 Net Current Assets 46,980 60,856 82,962 83, , , , ,498 Total Assets 293, , , , , , , ,493 4 May

7 Financials and Valuations Ratios Y/E Mar E 2018E Basic (INR) EPS Cash EPS Book Value DPS Payout (incl. Div. Tax.) Valuation(x) P/E Cash P/E Price / Book Value EV/Sales EV/EBITDA Dividend Yield (%) Profitability Ratios (%) RoE RoCE Turnover Ratios (%) Asset Turnover (x) Debtors (No. of Days) Inventory (No. of Days) Creditors (No. of Days) Leverage Ratios (%) Net Debt/Equity (x) Cash Flow Statement (INR Million) Y/E Mar E 2018E Adjusted EBITDA 63,162 68,868 65,685 57,764 54,598 34,410 46,184 50,262 Non cash opr. exp (inc) 860 1, ,456-21, (Inc)/Dec in Wkg. Cap. -18,799-20,385-23,207 12,816-18,154 6,131-3, Tax Paid -10,401-10,421-7,884-8,337-3,393 6, Other operating activities , CF from Op. Activity 34,822 39,221 35,223 59,786 11,451 43,820 41,720 50,541 (Inc)/Dec in FA & CWIP -84,876-60,604-84, ,525-50,964-30,000-16,800-16,800 Free cash flows -50,054-21,383-48,789-81,739-39,513 13,820 24,920 33,741 (Pur)/Sale of Invt 4, ,405 4,898-13, Others 289-4,138-8,408-3, , CF from Inv. Activity -80,507-64,723-95, ,437-65,365-27,800-16,437-16,998 Inc/(Dec) in Net Worth , Inc / (Dec) in Debt 55,364 33,044 75, ,838 90,704 25,000 17,000 0 Interest Paid -1,367-1,925-1,569-1,488-1,448-1,713-1,713-1,713 Divd Paid (incl Tax) & Others -4,914-8,804-12,593-21,563-34,110-32,808-34,843-34,163 CF from Fin. Activity 49,197 22,354 61,111 88,802 55,151-9,520-19,556-35,876 Inc/(Dec) in Cash 3,512-3, ,152 1,238 6,500 5,727-2,333 Add: Opening Balance 1,128 4,640 1,492 2,001 10,153 11,391 19,017 24,743 Closing Balance 4,640 1,492 2,001 10,153 11,391 17,890 24,743 22,411 4 May

8 Corporate profile Company description Jindal Steel & Power (JSP) has steel-making capacity of 3mtpa at Raigarh, 1.5mtpa at Angul and 2mtpa at Shadeed Oman. Its assets are spread over various mineral-rich countries. JSPL has captive iron ore mines. JSP has set up 3400MW power asset in at coal pit head in Chhattisgarh. It also has multiple coal resources overseas, mainly in Mozambique, South Africa, Australia and Indonesia. Exhibit 1: Sensex rebased Source: MOSL/Bloomberg Exhibit 2: Shareholding pattern (%) Dec-15 Sep-15 Dec-14 Promoter DII FII Others Note: FII Includes depository receipts Source: Capitaline Exhibit 3: Top holders Holder Name % Holding HSBC Global Investment Funds A/c HSBC GIF Mauritius Ltd. 2.0 Valiant Mauritius Partners Offshire Ltd. 1.8 Valiant Mauritius Partners Ltd. 1.7 HSBC Pooled Investment Fund A/c HSBC Investmet Fund-HSBC Pooled Asia Pacific Ex Japan Equity Fund 1.6 ICICI PRUDENTIAL LIFE INSURANCE COMPANY LTD 1.2 Source: Capitaline Exhibit 4: Top management Name Designation Exhibit 5: Directors Name Name Naveen Jindal Chairman Arun K Purwar Arun Kumar Savitri Jindal Chairman Emeritus Chandan Roy Haigreve Khaitan Jagdish Patra Ravi Uppal Company Secretary Managing Director & Group CEO Hardip Singh wirk Shalil Mukund Awale Sudershan Kumar Garg R V Shahi Shallu Jindal Dinesh Kumar Saraogi Rajeev Bhaduaria Source: Capitaline *Independent Exhibit 6: Auditors Name MZ & Associates Ramanath Iyer & Co S R Batliboi & Co LLP Type Secretarial Audit Cost Auditor Statutory Source: Capitaline Exhibit 7: MOSL forecast v/s consensus EPS MOSL Consensus (INR) forecast forecast Variation (%) FY FY FY Source: Bloomberg 4 May

9 N O T E S 4 May

10 Disclosures Jindal Steel & Power This document has been prepared by Motilal Oswal Securities Limited (hereinafter referred to as Most) to provide information about the company (ies) and/sector(s), if any, covered in the report and may be distributed by it and/or its affiliated company(ies). This report is for personal information of the selected recipient/s and does not construe to be any investment, legal or taxation advice to you. This research report does not constitute an offer, invitation or inducement to invest in securities or other investments and Motilal Oswal Securities Limited (hereinafter referred as MOSt) is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your general information and should not be reproduced or redistributed to any other person in any form. This report does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, investors should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. The price and value of the investments referred to in this material and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur. MOSt and its affiliates are a full-service, integrated investment banking, investment management, brokerage and financing group. We and our affiliates have investment banking and other business relationships with a some companies covered by our Research Department. Our research professionals may provide input into our investment banking and other business selection processes. Investors should assume that MOSt and/or its affiliates are seeking or will seek investment banking or other business from the company or companies that are the subject of this material and that the research professionals who were involved in preparing this material may educate investors on investments in such business. The research professionals responsible for the preparation of this document may interact with trading desk personnel, sales personnel and other parties for the purpose of gathering, applying and interpreting information. Our research professionals are paid on twin parameters of performance & profitability of MOSt. MOSt generally prohibits its analysts, persons reporting to analysts, and members of their households from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. Additionally, MOSt generally prohibits its analysts and persons reporting to analysts from serving as an officer, director, or advisory board member of any companies that the analysts cover. Our salespeople, traders, and other professionals or affiliates may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make investment decisions that are inconsistent with the recommendations expressed herein. In reviewing these materials, you should be aware that any or all of the foregoing among other things, may give rise to real or potential conflicts of interest. MOSt and its affiliated company(ies), their directors and employees and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the affiliates of MOSt even though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report Reports based on technical and derivative analysis center on studying charts company's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamental analysis. In addition MOST has different business segments / Divisions with independent research separated by Chinese walls catering to different set of customers having various objectives, risk profiles, investment horizon, etc, and therefore may at times have different contrary views on stocks sectors and markets. Unauthorized disclosure, use, dissemination or copying (either whole or partial) of this information, is prohibited. The person accessing this information specifically agrees to exempt MOSt or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOSt or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOSt or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The information contained herein is based on publicly available data or other sources believed to be reliable. Any statements contained in this report attributed to a third party represent MOSt s interpretation of the data, information and/or opinions provided by that third party either publicly or through a subscription service, and such use and interpretation have not been reviewed by the third party. This Report is not intended to be a complete statement or summary of the securities, markets or developments referred to in the document. While we would endeavor to update the information herein on reasonable basis, MOSt and/or its affiliates are under no obligation to update the information. Also there may be regulatory, compliance, or other reasons that may prevent MOSt and/or its affiliates from doing so. MOSt or any of its affiliates or employees shall not be in any way responsible and liable for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. MOSt or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement. The recipients of this report should rely on their own investigations. This report is intended for distribution to institutional investors. Recipients who are not institutional investors should seek advice of their independent financial advisor prior to taking any investment decision based on this report or for any necessary explanation of its contents. Most and it s associates may have managed or co-managed public offering of securities, may have received compensation for investment banking or merchant banking or brokerage services, may have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months. Most and it s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report. Subject Company may have been a client of Most or its associates during twelve months preceding the date of distribution of the research report MOSt and/or its affiliates and/or employees may have interests/positions, financial or otherwise of over 1 % at the end of the month immediately preceding the date of publication of the research in the securities mentioned in this report. To enhance transparency, MOSt has incorporated a Disclosure of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report. Motilal Oswal Securities Limited is registered as a Research Analyst under SEBI (Research Analyst) Regulations, SEBI Reg. No. INH Pending Regulatory inspections against Motilal Oswal Securities Limited: SEBI pursuant to a complaint from client Shri C.R. Mohanraj alleging unauthorized trading, issued a letter dated 29th April 2014 to MOSL notifying appointment of an Adjudicating Officer as per SEBI regulations to hold inquiry and adjudge violation of SEBI Regulations; MOSL replied to the Show Cause Notice whereby SEBI granted us an opportunity of Inspection of Documents. Since all the documents requested by us were not covered we have requested to SEBI vide our letter dated June 23, 2015 to provide pending list of documents for inspection. List of associate companies of Motilal Oswal Securities Limited -Click here to access detailed report Analyst Certification The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. The research analysts, strategists, or research associates principally responsible for preparation of MOSt research receive compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues Disclosure of Interest Statement JINDAL STEEL & POWER Analyst ownership of the stock No Served as an officer, director or employee No A graph of daily closing prices of securities is available at and Regional Disclosures (outside India) This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOSt & its group companies to registration or licensing requirements within such jurisdictions. For Hong Kong: This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) SFO. As per SEBI (Research Analyst Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH ) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of research report in Kong Kong. This report is intended for distribution only to Professional Investors as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to which this document relates is only available to professional investor and will be engaged only with professional investors. Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research Analysis in Hong Kong. For U.S Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In addition MOSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by MOSL, including the products and services described herein are not available to or intended for U.S. persons. This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement. The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account. For Singapore Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors Regulations and is a subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to accredited investors, as defined in the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time. In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited: Varun Kumar Kadambari Balachandran Varun.kumar@motilaloswal.com kadambari.balachandran@motilaloswal.com Contact : (+65) (+65) / Office Address:21 (Suite 31),16 Collyer Quay,Singapore Motilal Oswal Securities Ltd Motilal Oswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai Phone: reports@motilaloswal.com 4 May