Dalal Street

Jindal Saw Q3 net sales declined 7.6% YoY to Rs13,729mn (vs our estimate of Rs14,316mn). PAT surged 46.3% to Rs1,464mn as interest outgo fell 33.2% to Rs366mn. Margin expanded 520bp at 18.3% due to the 21% increase in blended price realization and 16.8% decline in raw material costs.

During Q3, the company bagged orders for DI pipes worth $105mn, increasing its total order book to US$700mn to be executed by March 2010. However, it failed to bag new orders for seamless pipes as the demand outlook for crude still remains poor. So though there is medium-term visibility, long-term earnings visibility is
missing.

For Q2FY10, PIL standalone revenue remained flat at 2,016 mn, while its PAT grew by 31% to INR 396 Mn. The EBITDA margin at INR 409mn was up 27% on YoY and 88% on sequential basis. The EBITDA margin at 20% witnessed rise of 424 bps on YoY due to lower forex losses (INR -5 Mn this quarter against 113 Mn during similar period, year ago) and lower other expenses (down 18% YoY). Higher PAT, however was backed by higher
other income which rose to INR 98 Mn (+77% YoY). Other income included reversal of excess provision for doubtful debts (INR 9.5 mn) which made last year, redemption of MF and Other Investment and Interest on FD.

PIL’s order book continued to stand at INR 8000mn, after adjusting for projects on hold and scrapped which has execution cycle of ~12 months.