Expect 70-80% upside in JSW ISPAT: Aashish Tater

Expect 70-80% upside in JSW ISPAT Steel in next 18-24 months, says Aashish Tater, Head of Research, Fort Share Broking.

Tater told CNBC-TV18, “In last 7 years if you take a quantitative snapshot, JSW ISPAT Steel has not fallen below Rs 9. Incidentally it has made a low of 9.06. The second theory that we have been propounding that after an open offer companies roughly trades at 30-40% of the open offer price. I think that particular model has now given me a buy signal generated that the downside is almost capped to that Rs 9."
He further added, "If you see the management plan for next 24 months, I am not taking a short-term call but a longer term call on this particular stock, they want to vertically integrate this through power captive plant and also coke oven Plant which will definitely be EPS accretive."
"You will see that quarter on quarter the interest burden is going off the balance sheet. We feel by next year the company would be paying you less than Rs 180 crore of interest from current Rs 250-255 per quarter which will be a substantial reduction and will definitely benefit the long-term players."
"On quantitative basis and fundamental basis when the company will turn around we feel this particular company even might get merged with the parent itself and the ratio that we are working is roughly around 38 times. 38 for one that 
roughly takes a good arbitrage at current levels."
"The stock with almost no downside from current levels and potential upside of almost 70-80% from next 18-24 months perspective, we feel this is one stock which can be looked upon and very interesting aspect that I like about it is getting out of F&O space. Now good players with longer term horizon would actually make it a good fundamental bet than a speculative bet at current levels."
"So take all these scenarios we feel this is one stock that can be looked upon whereas in the steel sector where we have some negative bias attached to it but still we feel this stock might outperform given the current scenario." Disclosure: It is safe to assume that the stock discussed has been recommended to clients. No personal position.