Goldman Sachs Report on Indian Steel Sector
Initiate on Indian steel sector with an attractive stance
We initiate coverage on the Indian steel sector with an attractive stance based on a bullish outlook for steel demand and prices. We believe that robust steel prices will be sustained as demand momentum remains buoyant, enabling global steel producers to pass on the cost- push inflation from tight raw material and freight markets.
Sesa Goa and Jindal Steel & Power are our top picks
We initiate on Sesa Goa (SESA.BO) with a Buy rating and DCF-based 12- month TP of Rs2,504, implying 28% potential upside. We believe its current valuation does not factor in our bullish medium-term outlook for iron ore prices. We initiate on Jindal Steel & Power (JNSP.BO) with a Buy rating and SOTP-based 12-month TP of Rs4,895, implying 25% potential upside. We believe JSPL is in a sweet spot of an India infrastructure-driven growth story and its current valuation does not price in the robust growth outlook. We rate Tata Steel (TISC.BO) Neutral with a SOTP-based 12-month TP of Rs763. Our bullish outlook on steel prices is offset by Tata Steel’s current valuation, which leaves little room for potential upside. We also initiate on JSW Steel (JSTL.BO) and SAIL (SAIL.BO) each with a Neutral rating.
Company Rating Target Sesa Goa Buy 2504 Jindal Steel & Power Buy 4895 Tata Steel Neutral 763 JSW Steel Neutral 705 SAIL Neutral 175
I’ll send the report later when I get home (cannot access gmail from my office)
Regards, Daniel
