JP Morgan bullish on Tata Steel, JSW and SAIL
The brokerage firm said steel demand has increased 5 per cent month-on-month in December, taking monthly steel demand to a 21-month high. However, production has not been enough.
By ET Bureau | Updated:
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Mumbai: JP Morgan remains overweight on Tata Steel, JSW Steel and Steel Authority of India (SAIL) amid strong domestic steel pricing environment and strong earnings outlook.
“...Indian steel companies have the best near-term earnings outlook and the largest disconnect between stock prices and underlying earnings,” said JP Morgan in a note.
Shares of Tata Steel ended up 5.7 per cent at Rs 722.75, SAIL ended up 2.3 per cent at Rs 78, and JSW Steel ended up 0.78 per cent at Rs 405.
The brokerage firm said steel demand has increased 5 per cent month-on-month in December, taking monthly steel demand to a 21-month high. However, production has not been enough.
JP Morgan said that if India’s steel demand were to show secular growth of 5-6 per cent a year, it would require an additional supply of 5-6 million tonnes a year even as the firm expects total capacity addition of 13 million tonnes over the next five years, which implies increasing deficit.
The firm said that the full benefit of the record prices would come through in the March and June quarters for steel companies, and while the December quarter should be a record quarter for earnings, March and June could be even higher.
“...Indian steel companies have the best near-term earnings outlook and the largest disconnect between stock prices and underlying earnings,” said JP Morgan in a note.
Shares of Tata Steel ended up 5.7 per cent at Rs 722.75, SAIL ended up 2.3 per cent at Rs 78, and JSW Steel ended up 0.78 per cent at Rs 405.
The brokerage firm said steel demand has increased 5 per cent month-on-month in December, taking monthly steel demand to a 21-month high. However, production has not been enough.
JP Morgan said that if India’s steel demand were to show secular growth of 5-6 per cent a year, it would require an additional supply of 5-6 million tonnes a year even as the firm expects total capacity addition of 13 million tonnes over the next five years, which implies increasing deficit.
The firm said that the full benefit of the record prices would come through in the March and June quarters for steel companies, and while the December quarter should be a record quarter for earnings, March and June could be even higher.
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