Buy JSW Steel with a target at Rs 1434: Motilal Oswal

JSW Steel has strongest volume growth among peers and less exposure to steel price volatility, said Motilal Oswal Securities in a note. The brokerage has maintained its buy rating on the stock with a target of Rs 1,434.

In a note to clients, the brokerage said, “Strong volume growth and tailwind of margin expansion will drive 93 per cent YoY growth in cons. EBITDA to Rs 11,700 crore in FY17E. JSTL is best placed to benefit from upcoming auction of iron ore mines in Karnataka. Stock trades at EV/EBITDA of 6.7xFY17E and 5.5xFY18E.”

Although there are marginal raw material cost pressures, yet the margins will expand driven by stronger steel prices, operating leverage and cost benefits, the brokerage added.