Contents
Investment Case....................................................... 3
Summary & Conclusions.......................................................3
Why We Prefer Tata and JSW to SAIL and JSPL........................................ 3
Tata Steel and JSW Steel; What’s Not in the Prices....................................... 4
Why We Are Upgrading the Indian Steel Sector ................................................ 4
Why Are We Not Upgrading to Attractive ....................................................................... 5
Risk-Reward Snapshot: Tata Steel (TISC.BO, Rs390.8, OW, PT Rs471) ......................... 7
Financial Summary: Tata Steel ......................................................................... 8
Tata: Breathing Space; Leg Up Needs Quick Action; Upgrade to OW..................9
What’s Changed................................................................................9
Key Debate ................................................................................9
When will Corus operations show a meaningful rebound?............................9
Key Issues.............................................................................9
Valuation .............................................................................................10
Risk-Reward: JSW Steel (JSTL.BO, Rs616, OW, PT Rs716)..................... 12
Financial Summary – JSW Steel................................................... 13
JSW Steel: Upgrading to OW as Earnings Trajectory Ticks Up.................. 14
Investment Arguments .....................................................14
Valuations ................................................................................14
Risk-Reward Snapshot: SAIL (SAIL.BO, Rs151.1, EW, PT Rs128)................. 17
Financial Summary: Steel Authority of India ................................. 18
SAIL: Outlook Improved But Most of This in Price; Upgrade to EW ....... 19
What’s Changed................................................................19
Key Debates.............................................................................19
(1) How Indian steel prices will move by F4Q10 ..................................19
(2) To what extent can staff costs be trimmed?........................................19
(3) Can coking coal costs be cut? ..........................................................20
(4) Is SAIL’s capacity expansion plan realistic? ............................20
Valuation ..............................................................................................20
Risk-Reward: JSPL (JNSP.BO, Rs2,491.3, EW, PT Rs2,282) ............... 22
Financial Summary – JSPL ................................................................ 23
JSPL: Steel Looking Up; Power Stabilizing; Upgrade to EW ................. 24
Investment Arguments ...........................................................................24
Valuations ...................................................................................24
|
