According to Espirito Santo, JSPLs FY16 Ebitda (earnings before interest, taxes, depreciation and amortisation) could take a hit of R1,500 crore if its coal blocks are deallocated. JSPLs cumulative captive coal output from Gare Palma IV-1/2/3 stands at ~11-12MT. This will directly affect the existing profitability of its steel and power operations. Our back of envelope calculation indicates JSPLs FY16E Ebitda could be eroded by R1,500 crore, Espirito Santo said in a report.
The Supreme Court on Monday declared all the coal blocks allocated since 1993 illegal.
Post SCverdict, JSPLs entire domestic coal block assets are now under risk. As such, replacing captive production with coal purchased at market price could impact JSPL FY15/16E EPS estimates by 36/30%, respectively, (valuation hit would be ~30%), UBS said.