Hold on JSW Steel – TP Rs.616 - Geojit BNP Paribas Financial Services

- The company has reported better than expected PAT due to better than expected sales volume and receipt of insurance claims at the US operations. Excluding the impact of insurance claims, increase in PAT is not substantial.

- Interest cost in the quarter increased but this was partly offset by lower than expected tax rate.

- Standalone sales volume was better than expected due to 0.4 million ton of destocking. However, EBITDA/ ton missed expectations by 7%.

- Ispat's 4QFY12 EBITDA declined 12% from estimates despite 44% increase in volume.

- Company has maintained FY13 production guidance of 8.5 million tons assuming that category A mines would restart production by June and category B mines by October 2012.

- However, the stock is unlikely to perform well in the near term because of the ongoing probe against the company on allegations of illegal mining.

- Maintain 'hold' rating with a target price of Rs.616 over one year.

Source : Equity Bulls

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