SELL JSW STEEL FUT 2
LOTS BELOW 750 TARGET 738/725 SL 765
JSW STEEL - In just 12 years, JSW Steel has impressively
transformed its 2010 acquisition of a 3.3 mtpa steel plant into a massive 10
mtpa integrated steel plant. The company is currently working on project
configuration and land acquisition and has plans to increase capacity by an
additional 4 mtpa. Phase II, which has a lower conversion cost of Rs 4,500 per
tonne than phase I and was put into operation by JSW Steel in Q3FY22,
impressively increased production to rated capacity within a year. Despite
significant growth capex, the company would generate FCF (pre-growth capex) of
Rs 60,000 crore over FY2023-25E at through-cycle margins, led primarily by
strong volume growth and deleverage. We have increased our fair value to Rs 685
from Rs 630 and increased our Ebitda by 9.6 percent/6.7 percent for FY2024-25E.
Given the high valuation at 7 times EV/Ebitda FY2024E, we maintain our SELL
rating.
BUY TITAN FUT 2 LOTS ABOVE 2518 TARGET 2543/2570 SL 2498
TITAN - Tanishq is doing very well, and Titan's management has
chosen to take a value-focused approach, which is working out well for them.
According to the brokerage, the management of the business did not pass on the
entire effective import duty increase of 4.25 percent to customers in July. The
management of the jewelry business stated that, despite a shift in the
geographic mix, there is a good chance that the proportion of stud sales will
return to levels prior to Covid. The Watches and Wearables segment's targeted
20% CAGR will be primarily driven by the Wearables business. "The
management indicated that expansion in return ratios is unlikely to be sharp in
the first few years due to higher upfront investments. However, the healthy
growth in overall revenue and earnings over the preceding five years is likely
to continue over the next five years.
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