JSW Steel JSW ISPAT eating into profitability ACCUMULATE : :Emkay

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JSW Steel

JSW ISPAT eating into profitability

ACCUMULATE

CMP: Rs657                                        Target Price: Rs742

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n     Consolidated topline in line with revised estimates at Rs 81.4 bn, up 36% YoY and 10% QoQ aided by better performance at US unit. Blended avg. realizations stood at Rs 44841/tonne

n     EBITDA at Rs 13.94 bn was up 36% YoY but down 3% QoQ. While margin remained flat YoY but fell 218 bps QoQ. Consol EBITDA/ tonne came in at Rs 7,406 (US$162) for the quarter

n     APAT at Rs 6,042 mn though was up 66% YoY and 23% QoQ, forex loss of Rs 5.14 bn and adjustment on account of Ispat of Rs 7.54 bn resulted into a net loss of Rs 6.7 bn

n     Factoring in higher costs and near term challenges revised earnings for both FY12 and FY13. Valuing at 5.5xFY13 EV/ EVBITDA, we arrive at a target price of Rs 742; Accumulate