ICICI Direct is bullish on JSW Steel has recommended buy rating on the stock with a target price of Rs 375 in its research report dated May 18, 2018.
ICICI Direct's research report on JSW Steel
JSW Steel reported stellar Q4FY18 numbers. Sales volume for the quarter was at 4.22 million tonnes (MT), up 7% YoY, 6% QoQ, higher than our estimate of 4.0 MT. Consolidated topline for the quarter was at Rs 20817 crore (up 25% YoY, 17% QoQ) significantly higher than our estimate of Rs 18820.6 crore primarily due to healthy realisations Standalone operations posted a robust EBITDA/tonne of Rs 11950/tonne significantly higher than our estimate of Rs 10000/tonne (Q3FY18: Rs 9000/tonne, Q4FY17: Rs 7586/tonne). Consolidated EBITDA came in at Rs 5290 crore (up 67% YoY, 37% QoQ, higher than our estimate: Rs 4288.7 crore). The resultant consolidated EBITDA margin was at 25.4% vs. our estimate: 22.8% The company reported other income of Rs 45 crore, depreciation of Rs 865 crore and interest & finance cost of Rs 883 crore. The ensuing consolidated PAT came in at Rs 2879 crore.
Outlook
We value the stock on an SOTP basis assigning 6.5x FY20E EV/EBITDA to the core and factoring in CWIP till FY20E at 0.7x book. Hence, we arrive at a target price of Rs 375. We maintain our BUY recommendation on the stock.
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