SAIL trading near to its 5-year historic low - Microsec

SAIL Ltd is trading at almost near to its 5-year historic low of INR55 per share. We believe that risk reward is very favorable at current valuations with key triggers being company planning a capex of INR70000 cr for doubling the capacity from 12MT to 24MT of which major expansion of INR62000 cr is likely to be completed by FY14e, hike in steel prices leading to improved realizations, improvement in steel demand scenario and softening of coking coal prices.

At CMP of INR64 per share, SAIL is trading at a P/E multiple of 8.01x its TTM EPS of INR7.99 and EV/EBITDA of 6.84x its TTM EBITDA of INR5377 crore.

At the floor price of INR63 per share, which is at 1.59% discount on the closing price of 21st March, 2013 (INR64 per share), the stock trades at a P/E multiple of 7.88x its TTM EPS of INR7.99 and EV/EBITDA of 6.76x its TTM EBITDA of INR5377 crore.

We recommend a "SUBSCRIBE" to the stock at the floor price of INR63 per share. The stock is trading at attractive valuations as compared to its domestic peers, which possess an average P/E of 13.6x.

Source : Equity Bulls

Keywords