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JSW STEEL


3QFY11 crude steel production up 12%; Expansion to 11mtpa on track; Expect 40% volume growth in FY12
JSW Steel reported 6.9% YoY growth in crude steel production to 573k tons for Dec-2010 and 12% YoY growth to 1.64m tons for 3QFY11.

3.2mtpa expansion to 11mtpa capacity at Vijaynagar is on track to be completed by Mar 2011. For FY12, JSW Steel is expected to deliver 40% volume growth.

JSW Steel has recently acquired 41% stake in Ispat Inds and has bid for Bellary Steel assets for Rs.2.1b.

Bellary Steel is a part-finished steel plant with around 700 acres of land and 100ktpa of running sponge iron kiln.

Ispat acquisition has given JSW Steel better grip over South and western India flat product market, and has opened another opportunity of growth at Dolvi.

For 3QFY11, JSW’s EBITDA per ton is likely to be around US$150, which is likely to expand QoQ in 4QFY11 due to run up of steel prices. Stock trades at an attractive PE of 9.9x FY12E and 7x FY13E and EV/EBITDA of 5.9x FY12E and 4.3x FY13E. Maintain Buy.