>Jindal Steel and Power Ltd.(Deutsche Bank AG)

A High Conviction Buy
{Ticker: JSP IN, JNSP.BO; Target Price: INR 4150/sh (33% upside)}
1. A low cyclical business
2. Adding capacities at a fast pace
3. New ventures are very profitable
4. Operational captive coal block a competitive advantage
5. Cost savings, volume growth in steel and power drives PAT
6. Stock performance does not capture low cyclicality
7. Our TP of INR 4150, based on SOTP and DCF approach, implies 33% upside potential
– TP implies exit P/E of 19.7x FY10e for power and 10xFY10e for steel - a discount to peers
– Only large power utility trading at a near 20% discount to NPV
8. Headline P/E is misleading due to conservative accounting policies
9. Key risks include: delays in implementation, imposition of a regulatory cap on spot power rates
below INR 4/unit and fall in global fuel prices by over 40% from current levels

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