Moneycontrol
May 18, 2017 05:57 PM IST | Source: Moneycontrol.com

Buy JSW Steel; target of Rs 241: Motilal Oswal

Motilal Oswal is bullish on JSW Steel has recommended buy rating on the stock with a target price of Rs 241 in its research report dated May 17, 2017.

Buy JSW Steel; target of Rs 241: Motilal Oswal

Motilal Oswal's research report on JSW Steel


JSTL will expand Dolvi plant’s capacity from 5mt to 10mt by Mar-20, taking the company’s total capacity to 23mt. The brownfield expansion at specific capex of USD0.5b/t (overall INR 150b) is less than half of recent/ongoing green field expansions in India (Exhibit 7).


Outlook


With EBITDA of INR136-144b over FY18-19E and net debt/EBITDA of 4x (Exhibit 11), JSTL can comfortably fund capex; it is among the few players in India to benefit from the steel industry’s long-term growth potential. We increase capex to INR 80b for FY18E/19E, as guided. EBITDA is upgraded by 2%, PAT by 6% on lower tax. We value CWIP at 1x. Valuing on 12month rolling 7x EV/EBITDA, we derive a TP of INR 241. Maintain Buy.


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