Ravindra Sonavane
JSW Steel Ltd joined the elite ₹1 lakh crore market capitalisation club on Monday as its shares surged more than 200% from their March 2020 lows. Intraday, the stock hit a record high of ₹418.95 on the BSE, gaining 4% from its previous close.
At closing, the scrip settled at ₹417.35 on the BSE, up 3.75% with a market cap of ₹1.01 lakh crore. JSW Steel posted a 21% rise from the year earlier in consolidated revenue in the December quarter to ₹21,859 crore. Net profit rose to ₹2,681 crore in the quarter from ₹211 crore a year earlier. Operating profit grew 2.5 times to ₹5,946 crore, while Ebitda margin expanded from 13.5% to 27.2%. The better-than-expected earnings was led by robust steel prices and higher output.
“The stock trades at 5.9x our revised FY22E EV/Ebitda. We value the stock at 6.5x FY22E EV/Ebitda. With the steel cycle on an upswing, volume growth at Dolvi and downstream projects commissioning in the next six months, we believe that there is an upside risk to our estimate,” Emkay Research said in a 25 January report.
According to brokerage Sharekhan, commissioning of Dolvi and downstream projects will expand JSW’s earnings, growing at a 20% CAGR between FY21E and FY23E, with return on equity improving to 15-15.6% from 10.5% in FY20. The JSW management has indicated that domestic steel prices are expected to remain range-bound in the near term and could moderate as long steel products have witnessed price correction recently due to improved supply.
{{/usCountry}}According to brokerage Sharekhan, commissioning of Dolvi and downstream projects will expand JSW’s earnings, growing at a 20% CAGR between FY21E and FY23E, with return on equity improving to 15-15.6% from 10.5% in FY20. The JSW management has indicated that domestic steel prices are expected to remain range-bound in the near term and could moderate as long steel products have witnessed price correction recently due to improved supply.
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