Buy MSP Steel & Power; target of Rs 107: Anagram Research

“MSP Steel & Power currently trades at a Market Cap/Revenue of 0.45x and at a P/E multiple of 4x on FY12E earnings. We expect the company to benefit
largely from the cost savings it is going to make on account of the backward
integration. We expect it to report a spectacular growth both in top line and
bottom line. Growth in bottom line would be largely driven by the savings
that the company would accrue from to its backward integration initiatives
and volume growth in product revenues which should spur topline growth.”

“The company appears to be undervalued and we expect it to be re-rated as
the benefits of savings on raw material and increased revenues from the
steel and power business get reflected in the company’s performance in the
coming quarters. We initiate coverage with BUY on MSP Steel & Power Limited with a target price of Rs 107. At our target price, the stock will be valued 6x FY12E & 0.80x FY12 Revenues,” says Anagram Research report.

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