JSW Steel rallies as brokerages see more upside

MUMBAI: Shares of JSW Steel surged in trade today after brokerages raised their target price on expectations of improvement in margins.

CLSA has upgraded the stock to 'Buy' from 'Sell' and raised its target price to Rs 1,300 from Rs 630 earlier.

The brokerage sees nearly 31 per cent upside to current market price. It expects the company’s consolidated EBITDA to rise 11 per cent CAGR over FY14-16. It has raised FY15-16 EBITDA estimates by 8-14 per cent on expectations of margins improvement on better product-mix.

The brokerage expects declining costs at Dolvi will aid margins.

Menawhile, JPMorgan has maintained 'Overweight' rating on the stock and has raised its target price to Rs 1,130 from Rs 950.

JPMorgan has raised JSW Steel’s FY15 EPS estimates by 30 per cent and FY16 EPS estimates by 38 per cent. It expects the company’s Dolvi unit to benefit from pellet and coke oven plant.

The new CRM mill will aid margins, the brokerage says. It expects iron ore quality to improve at Karnataka unit.

The brokerage doesn’t rule out a pull-back in stock price and is advising to use correction to add more long positions.

At 03:00 p.m.; the stock was at Rs 1033.10, up 3.95 per cent, on the BSE. It touched a high of Rs 1,041.30 and a low of Rs 995 in trade today.