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Jindal Steel & Power: Volume growth at inflection; Upside 33% - IndiaNotes.com
Jindal Steel & Power: Volume growth at inflection; Upside 33%
Motilal Oswal | Published: 12 Feb, 2018  | Source : IndiaNotes.com

Volume growth at inflection; maintain Buy: Looking at the progress at Angul and Raigarh, we believe our volume estimates of 1.2mt for 4QFY18 (v/s 970kt in 3Q) and 5.8mt (v/s 3.8mt in FY18) for FY19 appear comfortable. Steel production is at inflection – we expect 29% CAGR to 6.4mt over FY18-20. Strong long product prices in India, operating leverage, and timely volume growth augur well for earnings.Nearly 25% of raw material cost is insulated from input price risk due to captive iron ore mines and coal linkage. We remain positive on the stock – Buy with a target price of INR 361 (Exhibit 6).


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About Motilal Oswal

Motilal Oswal was founded in 1987 as a small sub-broking unit, with just two people running the show. Today it has a 2000 member team with a networth of Rs7 bn and market capitalization as of March 31, 2008 at Rs19 bn.

 

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