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Tata Sponge Iron (TSIL) is an associate company of Tata Steel, which holds a 39.7%
stake in the company. TSIL is a leading manufacturer of sponge iron, which is used
as a raw material in steel manufacturing, with an installed capacity of 3,90,000
tonnes per annum and a 26MW captive power plant.
The company has a long-term supply agreement with Tata Steel for assured supply
of iron ore for uninterrupted production.
TSIL has a 45% stake in Talcher coal block in Orissa with estimated reserves of
120mn tonnes for captive consumption. The company has deposited money for
the first phase of land acquisition with the Orissa government. Forest clearance for
the block is pending.
At the CMP of `310, the stock is trading at PE of 5.2x its FY2013E earnings and
P/B of 0.7x for FY2013E. The company is debt free with cash reserves of `221cr
and RoIC of 44% for FY2013E. We maintain our Buy rating on the stock with a
target price of `382, based on a target P/B of 0.9x for FY2013E.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tata Sponge Iron (TSIL) is an associate company of Tata Steel, which holds a 39.7%
stake in the company. TSIL is a leading manufacturer of sponge iron, which is used
as a raw material in steel manufacturing, with an installed capacity of 3,90,000
tonnes per annum and a 26MW captive power plant.
The company has a long-term supply agreement with Tata Steel for assured supply
of iron ore for uninterrupted production.
TSIL has a 45% stake in Talcher coal block in Orissa with estimated reserves of
120mn tonnes for captive consumption. The company has deposited money for
the first phase of land acquisition with the Orissa government. Forest clearance for
the block is pending.
At the CMP of `310, the stock is trading at PE of 5.2x its FY2013E earnings and
P/B of 0.7x for FY2013E. The company is debt free with cash reserves of `221cr
and RoIC of 44% for FY2013E. We maintain our Buy rating on the stock with a
target price of `382, based on a target P/B of 0.9x for FY2013E.
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