Jai Balaji (JAIB.BO, Buy, PT Rs 450, 265% upside) UBS: India Mid-Caps TOP PICKS - September 2011

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• Grown 10x over last 7 years – strong execution track record
• Current ops – 0.9m mtpa steel and 111MW power
• 700mt coal resources. Underground = lower execution
issues in India
• Purulia mega expansion – land/approvals in place
• Modular expansion to monetise coal, ensure no dilution
• FY10-13E 50% EBITDA CAGR – DI Pipe and coke oven
drivers
• Purulia expansion and coal earnings drivers from FY14E
• Implied FY12E EV/EBITDA 6.6x
• Current valuation FY12E EV/EBITDA below peers, only values
existing operations (replacement cost)
• Market Cap US$0.26bn, ADV
Promoter 51%, CVC 9.5% and IEP 3.5%
• Valuation: DCF UBS’s VCAM tool (assume WACC of
12.3% and terminal sales growth rate of 1%). Implied
FY13EV/EBITDA of 6.7x

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