Buy SAIL - Geojit BNP Paribas

Buy SAIL – TP Rs.109

- SAIL has been upgraded to 'buy' with a target price of Rs.109 over one year. The stock is being traded at a price range of Rs.94.

- It seems that current skepticism on the stock is undue. It is expected that earnings would rebound in FY13 -14 with the start-up of three projects and better coke availability.

- Three projects – IISCO, Rourkela and Bokaro are expected to be commissioned by end FY13.

- Restart of two coke ovens at Bokaro and upturn in external supply would address coke availability issues.

- Price outlook for longs has improved and this may also help the rebound.

- The stock is currently traded at 8.5 P/E of FY13 expected earnings and at 7.5 P/E of expected earnings for FY14. This implies that the valuation is not expensive.

- Upgraded to 'buy' with a target price of Rs.109 over one year. Further delays in projects, sharp fall in iron ore price and continuation of coke availability issues are major risks to the target price.

Source : Equity Bulls

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