Deutsche Bank upgrades Jindal Steel to 'hold'
MUMBAI: Deutsche Bank has upgraded shares of Jindal Steel and Power to 'hold' from 'sell' and raised target price on it by 78% to Rs 112 citing improving confidence in ramp-up of steel volume.
Shares of the company ended up 4% at Rs 128 on the BSE on Thursday.
"Our visit to JSPL’s Angul plant improved our confidence in the steel volume ramp-up as well as the accompanying operational cost savings...JSPL is on track to commission its 3.5mn tonne blast furnace at Angul in 1Q’FY18, which would be a key driver of the company’s ambitious ~50% YoY production growth target in FY18," said Deutsche Bank, raising FY18 and FY19 earnings estimates by 184% and 16% respectively.
Currently, high leverage remains a concern for Jindal Steel but the net debt/EBITDA is likely to improve to 5.4 times in FY19, said Deutsche Bank.
"While execution risks remain, we see limited downside in our base case with significant upside potential in a blue-sky scenario," it added.
Shares of the company ended up 4% at Rs 128 on the BSE on Thursday.
"Our visit to JSPL’s Angul plant improved our confidence in the steel volume ramp-up as well as the accompanying operational cost savings...JSPL is on track to commission its 3.5mn tonne blast furnace at Angul in 1Q’FY18, which would be a key driver of the company’s ambitious ~50% YoY production growth target in FY18," said Deutsche Bank, raising FY18 and FY19 earnings estimates by 184% and 16% respectively.
Currently, high leverage remains a concern for Jindal Steel but the net debt/EBITDA is likely to improve to 5.4 times in FY19, said Deutsche Bank.
"While execution risks remain, we see limited downside in our base case with significant upside potential in a blue-sky scenario," it added.
