JSW Steel: Trading Around A PE Of 69 At Q2 TTM EPS Against Avg Industry PE of 6---Is It Selling Steel Or Gold ??

Q3 & Q2-FY16 TTM EPS at (-) 36.59 & 15.21

and even after considering the one off exceptional loss item, 

Q3 results are way below street estimates

CMP: 1057

Either Sell below 1030-1015 or on rise around 1075-1090/1100-1125;

TGT1: 989-967-954*-924 (1-3M)

TGT2: 889*-856-800-750 (5-12M)

TSL>1145

Note: Closing above 1145 for at least 3 consecutive days for any reason, JSW may rally up to 1230-1275 & 1365-1405 zone in the mid to long term.

Consolidated Q3FY16 PAT was (-) Rs.923 cr against estimate of (-) Rs.60 cr (Loss);  

(YOY- 329 cr & QOQ-117 cr Profit).

Q3 EBITDA was Rs.141 cr down by around 90% YOY (Rs.1419 cr) and 87% QOQ (Rs.1047 cr).

Q3 P/L before exceptional items & tax was at around Rs.670 cr (-) against YOY- 482 cr and QOQ-250 cr; i.e. down by almost 240% and 170% !!!

Q3 Tax benefit/savings at around Rs. 1810 cr against expenses of around Rs.175 cr (YOY) and Rs.142 cr (QOQ).

Q3FY16 EPS at (-) 38.54 against 13.26 (YOY) and 4.49 (QOQ).

Q3 TTM EPS was at (-) 36.59 against Q2 TTM EPS of 15.21; i.e. average EPS of around 3.80 per quarter prior to Q3FY16. As par this trend Q4FY16 TTM EPS may be around (-) 35.02 and 17.50 by Q4FY17, even with 15% implied growth. 

The recent best QTR EPS was 13.26 at Q4FY15. Even for the sake of argument, if we assume an EPS of around 53.05-61.00 (@13.26*4=53.05 +15% growth), the fair value of the stock may be around 800-915 (FY:17-18) with an average implied PE of 15.

(against present average steel industry PE of 6).

Analytical Charts: