JSW Steel - Motilal Oswal

JSW STEEL: Jan-2011 crude steel production up 1.2% MoM to 580k tons

JSW Steel recorded 9% YoY and 1.2% MoM growth in crude steel production for the month of January 2011.

Flat rolled products production increased 2.2% MoM while longs remained flat. Company has taken steel price hike of Rs3,000 per ton since the start of 2011.

Since Dec 2010, monthly crude steel production is running at annualized rate of ~7m tons, significantly higher than estimated production of 6.5m tons for FY11.

Capacity will expand further by end of Mar 2011 with commissioning of new 3mtpa blast furnace. Steel production is expected to increase 39% YoY in FY12.

We expect 4QFY11 margins to expand to ~US$165/ton. The stock is trading at attractive FY12E P/E of 8.1x and EV/EBITDA of 5.1x. Maintain Buy.

Source : Equity Bulls

Keywords