Jindal SAW – Long-term visibility missing

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