Amar Ambani Stock Pick Gives 103% Gain In 6M. He Promises From Gains From It

JSW Steel Ltd.: Earnings growth to remain strong – BUY
CMP Rs1,040, Target Rs1,332, Upside 28.1%

JSW Steel has corrected sharply over the last three months due to rising concerns over dumping of Chinese steel, subdued domestic demand and decreasing domestic iron ore production. We believe that the correction in the stock is overdone and we expect the scenario to improve in FY16. The sharp correction in global iron ore prices has helped the company to switch to imported iron ore over domestic purchase. Landed cost of imported iron ore at JSW’s Dolvi and Salem plant is quite lower than the landed cost of iron ore from NMDC. The depreciation of the rupee would reduce the pressure of imports from China and Ukraine. We believe domestic demand would pick up from FY16 as revival in the domestic economy gains steam, which in turn will lead to an increase in infrastructure spending. We expect JSW’s bottomline to double over FY14-17 on account of (1) increased output from Dolvi (2) substitution of expensive domestic ore with cheaper imports (3) cost rationalization exe! rcise at Dolvi (4) superior product mix. Valuations at 4.9x FY16E EV/EBIDTA appear cheap compared to the global steel players trading at 5.7x. We upgrade our recommendation from Accumulate to BUY with a revised price target of Rs1,332.

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PTC India Fin Services Ltd. – Call Success & Update
Reco Price Rs32, Previous Target Rs65, New Target Rs80

We had recommended a BUY on PFS at Rs32 with 2-year price target of Rs65 in our Midcap Strategy Report (Double your stake, quadruple your money) dated June 30, 2014. The stock hit the target in today’s tading session thereby delivering a stunning return of 103% in less than six months of recommendation. In our recent rerport on the company dated December 15, 2014, we have extended the 2-year target to Rs80. Our conviction in PFS has been bolstered by the Government’s policy thrust in power sector particularly in the renewable space and encouraging interactions with the management in recent months. We believe that company can deliver sustainable RoA of 3.3-3.5% and RoE of 17-18% while operating on a comfortable leverage. Current valuation of 1.8x FY17E P/ABV is attractive in this context and represents material room for incremental re-rating.

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