Buy This Steel Stock For 14% Return, Company Reported 74% Growth: Anand Rathi

Brokerage firm Anand Rathi recommended investors to buy the stocks of JSW Steel Ltd. for a 14.37% return. JSW Steel reported a growth of 74.2% in its consolidated revenues at Rs. 3,80,710 million in Q3 FY22, as against Rs. 2,18,590 million in the same quarter, FY21.

Target Price

The Current Market Price (CMP) of JSW Steel Ltd. (JSW STEEL) is Rs. 661.60. Anand Rathi has estimated a Target Price for the stock at Rs. 757. The stock is expected to offer a 14.37% upside, in 1 year.

Stock Outlook
Current Market Price (CMP)	Rs. 661.60
Target Price	Rs. 757
1 year return	14.37%

Company performance

The company's consolidated operating margins during the quarter stood 24% at Rs. 91,320 million, as against 27.2% at Rs. 59,460 million in Q3 FY21, a contraction of ~320 basis points. The company's standalone EBITDA per ton for the quarter improved to around Rs. 17,000 in Q3 FY22, as against around Rs. 14,500 in the same quarter, FY21. The company's consolidated PAT margins stood 9.5% at Rs. 36,190 million in Q3-FY22 as against 13% at Rs. 28,370 million in Q3 FY21. The company's latest subsidiary Bhushan Power & Steel registered crude steel production of 0.64 million tonnes and sales volume of 0.58 million tonnes.

Comments by Emkay Global

Giving a buy rating to this stock, Anand Rathi stated, "The growth was driven by both increase in volumes and better overall realization during the quarter. The decline in margins was due to elevated prices of coking coal and higher power costs while lower ore prices partially offsetted the cost increase. We have incorporated the latest numbers and revised our projections for the company. Additionally, on the CAPEX front, the 5 MTPA brownfield expansion at Vijayanagar is progressing well, with civil works underway at the site, long lead-time items have been ordered. The project is expected to be completed by FY, 2024."

About the company

The US$ 13 billion JSW Group is ranked among India's leading business houses. JSW's innovative and sustainable presence in various sectors includes Steel, Energy, Infrastructure, Cement, Paints, Venture Capital and Sports. With a culturally diverse workforce spread across India, the USA, Europe, and Africa, JSW Group directly employs nearly 40,000 people. Its roadmap for the next phase of growth includes a target of achieving 37.5 MTPA steel capacity by FY25. The Company's manufacturing unit in Vijayanagar, Karnataka is the largest single location steel-producing facility in India with a capacity of 12 MTPA.

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Disclaimer

The above stock was picked from the brokerage report of Anand Rathi. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.