ABN Amro - Jindal SAW - Trading Call - BUY - CMP 575 - TGT 760

ABN Amro has given a buy trading call on JSW Steel,
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Strong Business Traction: Increasing demand of hydrocarbons is providing ample business opportunities and the same is expected to continue. Further, increased focus of Government on improvement in the water and sanitation facilities throws up good business prospects. JSL, with a wide product portfolio is expected to witness significant growth, which is further substantiated with its strong order book of Rs66bn.

Reasonable Valuation: JSL is currently trading at 12x F9/07E EPS of Rs47.22 (Reuters Consensus estimate), 9.8x F9/08E EPS of Rs57.69 and 7.6x F9/09E EPS of Rs74.15. However the market value of its quoted investments stands at Rs68 per share, factoring which JSL seems an attractive investment opportunity.

Price Breakout: JSL has given a strong breakout on a daily, weekly and monthly basis at Rs.500. The weekly price projection of the breakout comes to Rs.760.