Prabhudas Lilladher has given Accumulate recommendation for JSW Steel with a target price of Rs. 810 in its research report issued on Oct 21, 2021
Prabhudas Lilladher’s research report on JSW Steel
Steel (JSTL) reported Q2FY22 EBITDA in-line with our and consensus estimates. Domestic steel margins impacted due to lower realisations and higher costs. Lower earnings in standalone were offset by better performance in subsidiaries. Sentiments on Chinese demand turned negative across the major steel consuming sectors. While, the impact of lower demand has been equally negated by stringent curbs on production. Given the restricted supplies of Chinese steel in its domestic and exports markets, global steel prices are expected to remain elevated further supported by all-time high coking coal prices. As expected, margins were expected to soften due to unsustainable coking coal prices. Nevertheless, margins are significantly above historical averages by ~30% in spite of astronomical input prices. Led by favorable business dynamics and strong outlook on volume growth,
we maintain Accumulate rating with TP of Rs 810 based on EV/EBITDA of 6.5x FY23e.