ADD Jindal Steel, target of Rs 2884: IIFL
IIFL has recommended an add rating on Jindal Steel & Power with a 12-month target of Rs 2884 in its June 24, 2009 report.
“Jindal Steel and Power (JSPL) is expanding its power generation capacity from 1,333MW to 5,000MW by FY13ii. We believe that given the sustained peak power deficit in India and resultant high power prices (which are up 125% since FY04), its strategy to sell power through short-term PPAs will pay off handsomely, like the 1,000MW plant of its subsidiary Jindal Power (PAT of 15bn, RoE of 93% in FY09, the first year of operations). We forecast consolidated earnings will register a CAGR of 11% through FY12ii, despite weak steel prices, aided by 21% CAGR growth in power business profit. A unique revenue model (vertical integration + opportunistic sale of power) and visibility on expansion makes JSPL a good play on peak power deficit, Add,” says IIFL’s reports.
source: Moneycontrol
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