February 28, 2017 / 18:00 IST
We expect standalone sales volume to grow at a CAGR of 31% to 5.8mt and EBITDA to grow at a CAGR of 35% to INR 52b over FY17-19. Our estimate of 4.5mt for FY18 is conservative relative to JSP’s guidance of 6mt; we have factored in teething problems during startup of the new furnace. Consolidated EBITDA would grow at a CAGR of 35% to INR 52b over FY17-19.
Outlook
While there are some risks (steel and coking coal prices, slower production ramp-up) to our estimates, there could be upside if any of several anticipated events (access to iron ore inventories at Sarda mines, captive iron ore mines in auction, PPA for idle 1,500MW capacity, etc) play out. We are raising our target price to INR 180 (based on SOTP; earlier INR88 based on replacement cost) and are upgrading our recommendation to Buy.
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