Sharekhan revises Jindal Saw target to Rs 476

1 Apr 2009, 1242 hrs IST, ET Bureau

Sharekhan has maintained ‘Buy’ call on Jindal Saw and revised its target to Rs 476 per share which turns out to be over 165 per cent up side from current market price of Rs 179.

The brokerage says, “The order inflows have been slower for all pipe makers in the last few months due to deferment and curtailment of capex worldwide across user sectors.

Though, we believe that in the immediate period, the companies are likely to receive certain orders, as some of the domestic projects are up for bidding, especially from GAIL.

However, we believe that particularly in the scenario of slackening orders, the players are likely to cut on their margins in order to fuel the growth of their order book. Consequently, we expect the future orders to be quoted at lower margins.”

“We are reducing our estimates for JSL by 11.2 per cent for CY2009 and expect the company to report earnings of Rs 79.3 for the year.

At the current levels, the stock is trading at extremely attractive valuations, available at 2.2x its CY2009E earnings and at an EV/EBIDTA of 1.5x. Looking historically, the stock has already reached its trough valuations, which were last seen in 2002-2003.

We maintain our Buy recommendation on the stock with a revised price target of Rs 476 (6x CY2009E earnings),” the report said. At 12:20 pm, The scrip was up 1 per cent at Rs 179 against its previous close on the BSE.