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Buy JSW Steel; target of Rs 432: Sharekhan

Sharekhan is bullish on JSW Steel has recommended buy rating on the stock with a target price of Rs 432 in its research report dated January 22, 2021.

February 01, 2021 / 06:37 PM IST
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Sharekhan's research report on JSW Steel


JSW Steel Limited’s consolidated EBITDA at Rs. 5,946 crore (up 137.7% y-o-y) was 10% above our estimates, led by higher-than-expected EBITDA/tonne at Rs. 15,053/tonne (up 49.2% q-o-q) and slight 1% beat in sales volume at 3.95mt. Management reiterated its FY21E sales volume guidance of 15mt, which implies 12.6% y-o-y volume growth in Q4FY21E. Commissioning of capacity expansion by 5mmt at Dolvi plant has been delayed to Q1FY22 (from Q4FY21); however, it would drive strong volume growth over the next two years. Steel price is expected to remain range bound in the near term as long steel product price witnessed some moderation recently. Thus, margin seems to be near peak level, but it is likely to remain healthy, as JSW Steel will take price hike for the auto space in two phases (January and April).


Outlook


We maintain our Buy rating on JSW Steel with an unchanged PT of Rs. 432, given strong earnings growth outlook and decent RoE of 15-15.6%. At the CMP, the stock is trading at 7x its FY2022E EV/EBITDA and 6.5x its FY2023E EV/EBITDA.


For all recommendations report, click here


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first published: Feb 1, 2021 06:37 pm

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