July 25, 2022 / 15:18 IST
Most of the brokerages trimmed their target price after JSW Steel’s June quarter numbers missed consensus estimates due to several one-off provisions. Although most of them see raw material pressure easing off from the upcoming quarter, at the same time expect profitability to remain under pressure for the ongoing quarter due to falling steel prices. A cut in CAPEX plan was appreciated by the brokerage and was termed a “prudent step” by the company
Here’s what the brokerages have to say:
Jefferies
The global research firm has reiterated its 'underperform' rating but reduced the target price to Rs 385 from Rs 405. The brokerage expects the company to benefit from the sharp fall in coking coal as well as softer iron ore prices, but believes that Indian prices have room to fall further given an export duty in an oversupplied market. It called slashing FY23 capex guidance as a prudent step. The brokerage has slashed FY23-24 EPS by 19-38 percent which is below street estimates by 43-45 percent.
Credit Suisse
The brokerage firm has maintained its reduced rating and revised higher its target price to Rs 548 from Rs 500 earlier. The target price has been revised due to easing raw material prices. It expects pressure on profitability to persist in Q2FY23 due to a sharper fall in steel prices as compared to that of raw material prices.
CLSA
The brokerage firm has maintained a 'sell' rating and target price of Rs 500. It expects imposition of an export duty to be very short-lived. With benchmark prices falling down sharply, the brokerage expects FY23/24 standalone EBITDA of Rs 10,750/Rs 11,200 despite cost benefits and see downside risk to volumes.
Macquarie
The research firm has downgraded the company’s rating to underperform and reduced the target price by 37 percent to Rs 461, implying a downside of nearly 20 percent. The brokerage expects EBITDA/ton to decline in the next couple of quarters, as well as multiple contraction. It has lowered consolidated EBITDA by 41 percent for FY23 and 20 percent for FY24.
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