TATA Sponge Iron Ltd Initating Coverage Report By Karvy

We expect TSIL to sustain in terms of volume and sales realization. The positive outlook for construction, infrastructure and manufacturing sectors augurs well for the sponge iron industry. TSIL’s commendable balance sheet with zero debt and high cash flows makes it a VALUE BUY. We have valued TSIL based on 1 year forward EV/EBITDA. At the CMP of Rs 604, stock is trading at 6.7x FY15 EV/EBITDA and we valued TSIL at 6.5x FY17E EV/EBITDA for a target of 762 representing an upside potential of 26%.

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