MOSL: Morning India (23/June/17)- Metals: 73mt opportunity-JSW Steel and Tata Steel – the only contenders
​MOrning India (23/June/17): Metals: 73mt opportunity; JSW Steel and Tata Steel – the only contenders
Today’s top research idea
Metals: 73mt opportunity; JSW Steel and Tata Steel – the only contenders
India’s steel demand is expected to outpace supply as early as FY21, with possibility of the gap widening to 73mt by FY27 if no investment is made. Therefore, it is the right time to build globally competitive new capacities, which will require large capex of INR150-250b.
Only JSTL and TATA have the balance sheets to support such capex. Other players are stressed or on verge of bankruptcy. JSTL is our top pick. We expect its stock price to double in three years. TATA's business is structurally improving due to its exit from weak assets and de-risking from pension liabilities in the UK. We upgrade the stock to Neutral.
We are positive on JSP. Maintain Sell on SAIL as it is struggling with its cost structure. Coal India will remain sluggish until grade, employee and volume growth concerns are behind.
Piping hot news
Nasscom forecasts single-digit growth for IT sector at 7-8% in FY18
The National Association of Software and Services Companies (Nasscom) on Thursday forecast 7-8 per cent growth for the IT sector in 2017-18 (FY18), attributing this to political and economic uncertainties impacting decisions and discretionary spend.
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