Result Update: JSW Steel - Accumulate - TP Rs.215 - Kotak

JSW Steel's (JSTL) reported strong set of numbers, led by better than expected realisation, as revenue from the sale of gas contribution continues to remain at elevated levels. JSTL reported profit of Rs10.14bn in 4QFY17. The consolidated net sales for the quarters came at Rs166.56bn, supported by higher realisation and an increase in sales volume. EBITDA grew 64.5%/10.4% YoY/QoQ to Rs31.65bn, with an EBITDA margin of 19%. Blended steel realisation increased by Rs4,158/tonne sequentially. The company has announced a slew of new projects at an investment of Rs268bn, thereby creating a roadmap to ~23MT of capacity by FY20E with the option of enhancing further. We revised our FY18E estimates to Rs15.9 (earlier Rs15.5) and introduce FY19E with an EPS of Rs19.9. We believe that, JSTL is among the few players in India to benefit from the domestic steel industry's long term growth potential (backed by timely capacity expansion). At CMP, the stock is trading at 12.2x/9.7x FY18E/FY19E earnings and on EV/EBITDA, it trades at 7x/6.1x FY18E/FY19E EBITDA. We now value the stock on 6.5x FY19E EBITDA and recommend ACCUMULATE (earlier SELL), with a revised target price of Rs215 (earlier Rs194)

Shares of JSW STEEL LTD. was last trading in BSE at Rs.199.15 as compared to the previous close of Rs. 192.75. The total number of shares traded during the day was 1065269 in over 5960 trades.

The stock hit an intraday high of Rs. 202.8 and intraday low of 192. The net turnover during the day was Rs. 212380295.

Source : Equity Bulls

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