*JSW Steel Q4FY22 Concall Highlights*
*Outlook: Neutral*

*Management has guided FY23 crude steel production volume to be 23.6 mnt and is targeting around 22.6 mnt of sales of steel during the fiscal. India's steel demand is expected to witness a steady growth of 7.5% in FY23 from 106 mnt in FY22. The government's announcement on infrastructure and construction projects will support steel consumption of 20 mnt over the next three years. However, the increase in coking coal prices will impact the comapany’s margin by $100-125/t in Q1FY23. Export duty imposed by the government is also likely to keep the stock muted going forward.*

• Steel exports registered an increase of 8% YoY to 4.57 mnt (28% of total sales), excluding BPSL in FY22. In Q4, exports stood at 0.87 mnt against 0.84 mnt in the previous quarter. The company expects exports to be in the range of 15-20% of the total steel sales in FY23.
• Inventory levels fell by 3,86,000 t in Q4.
• The company gave an update on ramping up of iron ore capacity at Karnataka and Odisha. In addition, 53% of iron ore will be sourced from captive mines next year. The company expects Indian iron ore prices to soften in the near term.
• JSW Steel has finalised the auto contracts with some of the major automakers, concluding these between Rs 11500-12000/t.
• Impact of coking coal from Q3 to Q4 increased by about $52/t, pushing the prices to $308/t during the same period. For Q1FY23, an impact of $100-125/t is expected as coking coal prices have sky-rocketed.
• Indian steel prices are likely to see further correction in June with the government imposing 15% export duty on it. We have already started to see prices to correct.

*Update on Expansion:*

• Brownfield expansion of 5 mnt at Vijayanagar works is under progress, and is expected to be completed by FY24.
• The downstream projects at Vasind and Tarapur works are to be completed in the first quarter of FY23.
• The expansion of BPSL to 3.5 mnt is expected to be completed by September 2022, and further expansion to 5 mnt shall be completed by FY24.

KM SUGAR Q4 : CONS. NET PROFIT UP 12 % AT 6.84 CR (YOY), DOWN 8 % (QOQ)

REVENUE UP 66 % AT 105 CR (YOY), UP 51 % (QOQ)

EBITDA DOWN 22 % AT 10.5 CR (YOY), DOWN 26 % (QOQ)

MARGINS AT 9.9 % V 21.1 % (YOY), 20.3 % (QOQ)

AMBIKA COTTON MILLS Q4 ; CONS. NET PROFIT UP 61 % AT 46 CR (YOY), DOWN 10 % (QOQ)

REVENUE UP 33 % AT 260 CR (YOY), UP 3 % (QOQ)

EBITDA UP 42 % AT 68 CR (YOY), DOWN 8 % (QOQ)

MARGINS AT 26.3 % V 24.16 % (YOY), 29.5 % (QOQ)

GANDHI SPECIAL TUBES Q4 ; NET PROFIT DOWN 34 % AY 8.4 CR (YOY), UP 2 % (QOQ)

REVENUE DOWN 21 % AT 32 CR (YOY), DOWN 8 % (QOQ)

EBITDA DOWN 36 % AT 10.5 CR (YOY), DOWN 6 % (QOQ)

MARGINS AT 32.8 % V 40.7 %(YOY), 32 % (QOQ)

JASCH IND. Q4 : ST. NET PROFIT UP 30 % AT 6.43 CR (YOY), DOWN 3 % (QOQ)

REVENUE UP 26 % AT 62 CR (YOY), DOWN 1 % (QOQ)

EBITDA UP 30 % AT 9.08 CR (YOY), DOWN 1 % (QOQ)

MARGINS AT 14.6 % V 14.1 % (YOY), 14.5 % (QOQ)

HUDCO Q4 : CONS. NET PROFIT UP 42 % AT 746 CR (YOY), 285 % (QOQ)

NII UP 4 % AT 608 CR (YOY), UP 12 % (QOQ)

AUTOLINE IND. Q4 : CONS. NET PROFIT AT 9.36 CR V 0.87 CR LOSS (YOY), UP 385 % (QOQ)

REVENUE UP 60 % AT 188 CR (YOY), UP 14 % (QOQ)

EBITDA UP 100 % AT 19.9 CR (YOY), UP 55 % (QOQ)

MARGINS AT 10.5 % V 8.5 % (YOY), 7.75 % (QOQ)

SITI NETWORK Q4 : CONS. NET LOSS 79 CR V 103 CR LOSS (YOY), 61 CR (QOQ)

REVENUE DOWN 6 % AT 359 CR (YOY), DOWN 2 % (QOQ)

EBITDA LOSS 67 CR V 78 CR LOSS (YOY), 50 CR LOSS (QOQ)

HINDUJA GLOBAL SOL. Q4 : CONS. NET PROFIT UP 333 % AT 5686 CR (YOY), UP 247 % (QOQ)

REVENUE UP 14 % AT 8654 CR (YOY), UP 8 % (QOQ)

EBITDA DOWN 70 % AT 51 CR (YOY), DOWN 74 % (QOQ)

MARGINS AT 0.59 % V 2.2 % (YOY), 2.43 % (QOQ)

"Key feature on the daily chart remains the gradual downtrend channel. Recent test and rebound off support provided by lower boundary" says #LauranceBalanco of CLSA on Nifty

"Expect 1Q22 #GDP growth to be at 4.5%. Fiscal buffers used up and fresh excise duty cuts create upside fiscal risk" says Sajjid Chinoy of Jp morgan

JSW Steel Review

JP MORGAN

Neutral, TP cut to Rs 610

Strong Operating Qtr; Large Capex over FY23-24

Co expects exports at 15-20% of its sales vol in FY23

Had cut domestic prices by Rs2000/t in early May & expects a larger price fall in June but overall sees 1Q ASP/t to be higher vs 4Q

JSW Steel Review

Nomura

Downgrade to reduce, TP cut to Rs 500

Profitability to remain under near-term pressure as export duties stall price hikes at a time of rising cost inflation

Steel spreads may further compress in 1QFY23F

*Business news*

*Macro*
• India Plans $387 Milllion Project to Upgrade Paradip Port
• The World Isn’t Spending Enough to Prevent Disasters, UN Says
• More Russian Oil Than Ever Before Is Heading for China and India
• Indian State Energy Group’s $122M Dividend Stuck in Russia
• Ships Divert to India as Sri Lanka Crisis Slows Colombo Port
• India’s SEBI Updates Procedural Rules for Defaulting Brokers
• Mahindra Profit Exceeds Estimates as Automobile Sales Rebound
• Musk Wants Market Access for Tesla Before Building Local Plants
• India’s DGCA Fines IndiGo for Special Needs Child Incident
• India’s FX Reserves Rise $4.72b to $597.5b in Week to May 20
o India Official Reserves Rise After 10 Weeks of Decrease
• Supertanker Receives Urals Crude via STS Transfer off Fujairah
• Rice Giant Thailand Wants to Coordinate Price Hikes With Vietnam
• 2021-22 Sugar Market to Flip to Surplus on India Exports: ISO
• Indian Underwriters Partially Rescue Weekly Bond Auction
• Conditions Good for India Monsoon Onset Over Kerala
• Growth in Non-Par Policies, Dividend in Focus for LIC: Preview

*Fund flows*
• Global Funds Sell Net INR19.4B of India Stocks Friday: NSE
o Domestic funds buy net 27.3b rupees of stocks
• Foreign Investors Sell Net INR5.64B of Indian Equities Thursday
• Foreigners Buy Net INR68.05B of Indian Equity Derivatives Friday

*Results & Developments*
• Aarti Industries (ARTO): 4Q Net Income 1.94b rupees, +43% Y/y, Beats Est. 1.66b; Revenue 17.6b rupees, +45% y/y
• Adani Enterprises (ADE): To Buy 50% in Local Agri-Focused Drone Maker
• Adani Green (ADANIGR): Says Unit Commissions 390-MW Wind- Solar Power Plant
• Bharat Petroleum (BPCL): Numaligarh Refinery Plans One-Month Maintenance From Mid-March
• City Union Bank (CUBK): 4Q Net Income 2.09b rupees, +88% y/y, est. 1.93b; Provisions +38% q/q to 1.71b; Gross NPA 4.7% vs. 5.21% q/q
• Crompton Greaves (CROMPTON): 4Q Net Income 1.82b rupees, -26% y/y, est. 1.86b
• Edelweiss Fin (EDEL): 4Q Net Income 424.5M Rupees Vs. 6.29B Rupees Y/y
• Engineers India (ENGR): 4Q group profit 791.2m rupees vs. 249.3m year ago; Revenue 8.18b vs. 11.3b
• Finolex Cables (FNXC): 4Q Net Income 2.24B Rupees Vs. 1.68B Rupees Y/y
• FSN E-Commerce Ventures (NYKAA): 4Q Net Income 85.6m rupees, -69% q/q, Misses est. 231.5m
• GAIL India (GAIL): Says No Disruption in Gazprom Supplies on Russia Sanctions
• Glenmark Pharma (GNP): 4Q Net Income 1.56b rupees, -33% y/y, misses est. 2.02b
• Hindustan Copper (HCP): 4Q Net Income 889.9M Rupees vs. loss 368.1m y/y; Revenue +4.4% to 5.45b
• Info Edge India (INFOE): 4Q Net Income 1.21b rupees, +74% y/y, est. 1.29b; Revenue +52% to 4.56b
• JSW Steel (JSTL): 4Q Profit 32.3b rupees, -23% Y/y, Misses Est. 45.58b; Seeks to Raise $1.8B
• Jubilant Pharmova (JUBLPHAR): 4Q Net Income 595.5m rupees, -72% y/y, est. 635.7m; Revenue -3.2% to 15.3b
• Karnataka Bank (KBL): 4Q Net Income 1.30B Rupees Vs. 313.6M Rupees Y/y
• Mahindra & Mahindra (MM):4Q Net Income 12.9b rupees vs. 2.45b y/y, beats est. 12.1b; Revenue +28% to 171.2b
• Oil India (OINL): 4Q Net Income 16.3b rupees, +92% y/y, est. 16.5b; Revenue +74% to 44.8b; Dividend INR5 rupees/share
• Oil & Natural Gas Corp (ONGC) 4Q Net Income 88.6b rupees, +32% y/y, Misses est. 109.3b; Revenue +63% to 345b; Dividend 3.25 rupees/share
• PB Fintech (POLICYBZ): 4Q Net Loss 2.2B Rupees Vs. Loss 2.98B Rupees Q/Q; Revenue +46% q/q to 5.4b
• Sun TV (SUNTV): 4Q Net Income 4.04b rupees, -10% y/y, est. 4.12b; Revenue +6.5% to 8.33b
• TCI Express (TCIEXP): Approves up to INR750m Buyback at INR2,050/Share
• United Spirits (UNSP): 4Q Net Income 1.36B Rupees, -19% Y/Y; Approves Sale of 32 Brands, Franchising of 11
o Diageo to Sell 32 Indian Brands to Inbrew for $106 Million

Stock'stowatch

MS on FSN E-Com(Nykaa)
OW, TP Rs 1845
4Q performance was in-line on GMV & topline, albeit lower on margins.
Good traction on customer acquisition, GMV growth, & increased disclosure levels were key +ves

GS on FSN E-com (Nykaa)
Buy, TP Rs 1730
4Q: Miss on GMV/rev but margins in-line
Nykaa expects GMV contribution from offline to remain at high single digit to low double-digits, given smaller assortment in physical stores vs that online

GAIL Review
JPM
OW, TP Rs 205
Underlying earnings strong; policy an overhang near-term, though co least exposed
While spot LNG prices have declined from peak & Henry hub prices have climbed higher, see upside risk to spot LNG prices for 2HFY23

GAIL Review
CLSA
Buy, TP raised to Rs 195 from Rs 180
Strong core performance
8%/9% Ebitda/Ebit beat on better-than-expected profit from gas trading & petchem
Building-in higher crude price estimates, lift FY23CL/24CL EPS by 18%/8%

JSW Steel Review
Nomura
Downgrade to reduce, TP cut to Rs 500
Profitability to remain under near-term pressure as export duties stall price hikes at a time of rising cost inflation
Steel spreads may further compress in 1QFY23F


JSW Steel Review
CLSA
Sell, TP cut to Rs 500 from Rs 550
Cost pressure unrelenting
4Q Ebitda in line; uncertainty to drive underperformance
While co is hopeful of a roll-back of recently imposed export duty, est higher coking coal costs to weigh on profitability