Angel Broking neutral on JSW Steel

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Angel Broking neutral on JSW Steel

Angel Broking has maintained neutral rating on JSW Steel, in its January 31, 2012 research report.

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Angel Broking has maintained neutral rating on JSW Steel , in its January 31, 2012 research report.

"JSW Steel's net sales grew by 35.3% yoy to Rs7,860cr (in-line with our estimate of Rs7,645cr) on the back of a 20.0% increase in steel volumes and a 21.4% increase in realizations. Capacity utilization improved to 84% at Vijaynagar plant in 3QFY2012, compared to 30-60% during 2QFY2012. However, EBITDA margin slipped by 191bp yoy to 15.9% due to rising input costs. The company reported a tax reversal of Rs141cr in 3QFY2012 compared to tax payable of Rs147cr in 3QFY2011, which resulted in adjusted net profit growing by 74.8% yoy to Rs668cr."

"The company reported that its usable iron ore inventory at Vijaynagar plant is expected to last for the next 3-4 months. However, it opined that continuing steel production would remain a challenge until the mining ban is lifted in Karnataka. JSW Steel's steel plant utilization improved qoq in 3QFY2012 on the back of increased availability of iron ore. However, we believe that sustaining steel production at current levels would remain a challenge until the mining ban is lifted in Karnataka. At the CMP, the stock is trading at 5.8x FY2012E and 5.0x FY2013E EV/EBITDA, which fairly discounts the anticipated volume growth of JSW Steel. Further, given the recent rise in the stock price, we recommend Neutral on the stock," says Angel Broking research report.  

Institutional holding more than 40% in Indian cos

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To read the full report click on the attachment