Accumulate Jindal Steel & Power; target Rs 250: P Lilladher
Brokerage house Prabhudas Lilladher is bullish on Jindal Steel & Power and has recommended 'Accumulate' rating on the stock with a price target of Rs 250 in its research report dated August 19, 2013.
August 20, 2013 / 13:32 IST
Prabhudas Lilladher's report on Jindal Steel & Power
"Jindal Steel & Power, management expects ~60-70 percent growth in FY15E EBITDA at Rs110-120bn on the back of full year contribution from 2.5mtpa Angul steel plant, 2400 MW expansion in JPL and 2mtpa SMS in Oman. Given the peak capex and teething year for expansions, management expects debt to peak-out in FY14 at Rs310bn. Management reiterated that JSPL won't invest in any project till the project is backed by ample raw material security and sound returns profile. This exemplifies management's steep cut in FY15's capex guidance by ~70 percent with revised guidance of Rs30bn. Given the low capex and strong expansion in EBITDA, company expects to turn FCF positive in FY15.""We reiterate our 'Accumulate' rating on the back of better earnings quality, judicious capital allocation and attractive valuations. In the near term, share buy-back would lend support to stock. However, ML of Utkal B/1 coal mine would hold the key for the stock's performance in longer run. We value the stock at Rs250, EV/EBITDA of 5x steel earnings and DCF for JPL valuation. Our PT has an upside risk of Rs30/share on account of Utkal B-1 mine clearance," says Prabhudas Lilladher research report.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
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