Monday, July 12, 2010
Jindal Steel Value Mantra ( Research Report )
CMP: 622 (30 june 2010)
Target: 710 Rs.
We expect around 30% y-o-y growth in the Top line and around 40% growth in bottom line for FY 2011 and FY 2012 driven by increase in Revenue on y-o-y basis. JSPL have expansion project plans in Orissa, Jharkhand and Chhattisgarh to commence by 2010-2011. Also JSPL has acquired the development rights for 20 Billion tonnes of Iron Ore in Bolivia. Further, the company has also forayed into exploration and mining of high value minerals like diamonds, etc. in places like Chhattisgarh, Jharkhand and the Democratic Republic of Congo. We expect that this will drive the revenue of JSPL up by at least 40% of current revenue.
JSPL is looking to increase its turnover every year with a decent profit on commencement of the new expansion projects.
Jindal steel and power currently trading at 622 Rs. . At current levels we expect an upside of approx. 15-20% in near term, indicating significant investment opportunity at current price level.Hence we initiate the coverage with a ‘BUY/HOLD’ recommendation.
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