Motilal Oswal is bullish on Jindal Steel and Power has recommended buy rating on the stock with a target price of Rs 287 in its research report dated March 19, 2019.
Motilal Oswal's research report on Jindal Steel and Power
Increase in the production run-rate at Angul in 4QFY19 offers visibility of ~22% volume growth for the standalone company in FY20. Coal gasification and DRI units, too, have restarted operations. Moreover, the third battery of the 500ktpa coke oven unit is in the advance stage of commercial production, which will substitute coke imports, and thus, reduce costs. FCF generation is improving. Management remains focused on monetization of assets in the global venture and deleveraging. The stock trades attractively at a cash P/E of 3.6x. Power business, too, can secure PPAs, with DISCOMs now starting to invite bids. Maintain Buy.
Outlook
The stock trades at an attractive valuation of 6.4x FY20E EV/EBITDA, 3.6x cash P/E and an FCF yield of ~16%. We value the stock at INR287 (SOTP-based).
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