JSPL shares rise on hopes of steel demand from China, lower coking coal prices

Expectations of a pick-up in steel demand from China and softer coking coal prices helped shares of Jindal Steel and Power Ltd (JSPL) to edge up on April 20.

China is the biggest consumer of steel in the world, while coking coal is used to make steel products.

Capital market analysts at CLSA said that it prefers the shares of JSPL and Tata Steel, driving the shares up.

At 9.40am, the stock price of JSPL was around Rs 587 apiece, up 1.4 percent from the previous close on the BSE.

According to CLSA Ltd, spot steel spreads are up by $40 per tonne as compared with levels from the third quarter of fiscal year ended 2023. It also said that profitability of steel companies such as Tata Steel and JSPL is likely to expand by $50 per tonne from Q3 levels.

Care Ratings have said that strong domestic demand is expected to aid volume growth for JSPL in the short-term. JSPL has bagged three non-coking coal mines in Odisha and Chhattisgarh recently, which is expected to reduce the company’s dependency on the open market to procure iron ore and non-coking coal, the rating agency said.

JSPL has completed the divestment process of Jindal Power Limited (JPL) against a cash consideration of Rs 3,015 crore in Q1FY23, and resultantly, JPL has ceased to be a subsidiary or an associate entity of JSPL.

In the last one year, JSPL’s stock has given a return of around 5 percent, while it has risen a whopping 546 percent in the past three years.

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