Accumulate JSW Energy: Aashish Tater

Aashish Tater, Head of Research at Fortunewizard.com told CNBC-TV18, "JSW Energy at current levels is very attractively priced in the space of power. If you see the dependence on coal imports for this particular stock almost 55 percent, we feel this is one stock which is likely to get benefited given that the outlook from three top coal manufacturers across the globe has been still a call that it will be going down even from current levels, which will definitely benefit companies like JSW Energy.”

He further added, “The second big trigger is that this company will be doing on a conservative side close to Rs 7.5 EPS for this fiscal even if I adjust for that foreign adjustment. So on Rs 7.5 in a power space company we feel this is one stock which will definitely get re-rated once opportunities for investment again come in.”
“Another thing is from dividend yield perspective this stock is available at Rs 41 and the stock has given you a dividend of Rs 2. Even for next fiscal we are working for a dividend of Rs 2.5 which roughly works out to be 5.5 percent dividend yield. So given all these factors we feel these are stocks where one can go and accumulate the stock from next six months perspective. What is happening is that in next six months we do not forecast much of outperformance from stocks like JSW Energy and it will languish between Rs 39 on downside and on upside around Rs 48-49.”
“However if someone takes a call from one year perspective we feel this is one stock which will likely get re-rated to Rs 62 where a P/E multiple of 8.5 will definitely justify its valuation. Also the project pipeline that the company is working with seven gigawatt, which will get commissioned by FY17-18, we feel this is one stock which will definitely see 20-25 percent growth year on year for next two years in terms of profitability. So given these two factors on conservative side we feel the stock will go and stabilize around Rs 62-63 levels from next one year perspective, so it is a safe stock from risk reward perspective.” Disclosure: Safe to assume stock discussed has been recommended to clients but no individual positions.