Analysts' corner

JSW Steel & Essar Oil

JSW Steel
Reco Price: Rs 957,
Target Price: Rs 1,190
Analysts expect JSW Ispat to report Ebitda/t of $71/tonne in 2011-12 and $90/tonne in 2012-13. Shipments have commenced from Chilean iron ore mines. Analysts expect volumes of 0.8 mt in 2011-12 and 1 mt in 2012-13, potentially contributing $32 million and $30 million to 2011-12 and 2012-13 estimated Ebitda, respectively. JSW Steel has guided for $170-180/tonne of Ebitda in 2011-12 as a result of increased captive coke, iron ore beneficiation and reduced coke rate/hard coking coal proportion. The 3.2 mtpa expansion, which was expected to be completed by the end of March, is now likely to get over in May. Analysts retain their assumption for 2011-12 at 8.5 mt. Analysts like JSW Steel for its volume growth and low conversion cost. Maintain buy .

— Edelweiss Securities

Essar Oil
Reco Price: Rs 136,
Target Price: Rs 175
Essar Oil delivered a consecutive strong quarter of profits and growth in Q4 of 2010-11. Revenues increased 27 per cent yoy to Rs 13,400 crore, led by higher volumes sold and higher crude prices. GRMs for Q4 of 2010-11 were at $8.1 a barrel, compared to $5.2/barrel for the quarter a year ago, reflecting the improved refining environment, which helped raise Asian benchmarks. As a result, Ebitda margins were at 6.6 per cent (up 70 bps yoy). Net profit grew 78 per cent yoy to Rs 320 crore. The refinery expansion is going well, and is set for commissioning by Q3 2011-12, and the CBM asset at Raniganj is also set to deliver commercial production over the next quarter. Maintain outperformer.

— IDFC Institutional Securities