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JSW Steel (JSTL)
Metals
Earnings fall short—valuations and pricing environment constrain our outlook.
JSW reported 2QFY10 EBITDA of Rs10.2 bn (-4.9% yoy, -5.2% qoq), about 6% lower
than our estimate. Net income of Rs3.7 bn (+26% qoq, +16% yoy) beat our Rs3.3 bn
estimate—entirely by forex gains of Rs1.57 bn. We like JSW’s volume-led growth
approach and strong execution capabilities. However, expensive valuations, likely
softness in steel prices and limited raw material integration constrain a more positive
view. We lower our target price to Rs1,115.
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