Buy JSW Steel, target Rs 310: Geojit Financial Services
JSW Steel is a largecap company, operating in iron and steel sector.
Geojit Financial Services has given a buy recommendation on JSW Steel with a target price of Rs 310.
Shares of JSW Steel traded at Rs 275 around 1:20 pm on 1 July, 2019. The brokerage has set a one-year horizon for the stock to hit the target price.
With general elections over, government spending is expected to pick up, increasing the demand for steel in India.
Steel demand is expected to be at 6 per cent with limited supply additions among major steel producers.
Steel prices are expected to rebound globally and domestically, with iron ore prices crossing $100 per tonne.
Any potential delay in renewal of Odisha mines could see domestic iron ore prices further increase in FY21. JSW expects flattish steels sales volume in FY20 (up 1.5 per cent YoY) and announced new projects with capex of Rs 5,700 crore and capex of Rs 34,300 crore over FY20-21 which is likely to increase net debt.
JSW trades at a 5.2 times FY20E EV/Ebitda. The company is among the lowest-cost global steel converters and is well positioned to benefit from the ongoing up-cycle in India steel.
"We maintain buy rating and value the stock at 6 times FY21E EV/Ebitda and arrive at a target price of Rs 310," said the brokerage.
Shares of JSW Steel traded at Rs 275 around 1:20 pm on 1 July, 2019. The brokerage has set a one-year horizon for the stock to hit the target price.
With general elections over, government spending is expected to pick up, increasing the demand for steel in India.
Steel demand is expected to be at 6 per cent with limited supply additions among major steel producers.
Steel prices are expected to rebound globally and domestically, with iron ore prices crossing $100 per tonne.
Any potential delay in renewal of Odisha mines could see domestic iron ore prices further increase in FY21. JSW expects flattish steels sales volume in FY20 (up 1.5 per cent YoY) and announced new projects with capex of Rs 5,700 crore and capex of Rs 34,300 crore over FY20-21 which is likely to increase net debt.
JSW trades at a 5.2 times FY20E EV/Ebitda. The company is among the lowest-cost global steel converters and is well positioned to benefit from the ongoing up-cycle in India steel.
"We maintain buy rating and value the stock at 6 times FY21E EV/Ebitda and arrive at a target price of Rs 310," said the brokerage.
Read this article in :Hindi