Motilal Oswal has downgraded JSW Steel to 'Neutral' after the company declared its first quarter results. The stock broker fixed price target at Rs 863.
Commenting on the results, Motilal Oswal said, ''JSW Steel reported consolidated EBITDA of Rs 16.3 billion (-3%QoQ, -38% YoY) i.e. 9% below estimates on steeper fall in realization (-9.3% QoQ) than expectation of 4.5% decline. Lower finance cost and little higher other income partially offset the impact on PBT. Adjusted LAT (loss after tax) was higher at Rs 1.1 billion (est. of Rs 452 million)."
Commenting on the investment rationale, Motilal Oswal said, ''JSTL will continue to deliver strong volume growth aided by expansion at Dolvi and improved domestic availability of iron ore. Cost of production will inch further down on correction in iron ore prices and operating efficiencies. We are cutting EBITDA estimates by 21% for FY16E and 5% for FY17E and target price by 17% to INR863/share (6% upside) on steep fall in steel prices. We downgrade the stock to Neutral.''
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