JSW Steel (JINVIJ) 1335

Result Update Rating matrix Rating : Hold Target : 1250 Target Period : 12 months Potential Upside : -6% What s Changed? Target Changed from 900 to 1250 EPS FY17E Changed from 63.8 to 95.0 EPS FY18E Introduced at 132.3 Rating Changed from Sell to Hold Quarterly Performance (Consolidated) Q4FY16 Q4FY15 YoY (%) Q3FY16 QoQ (%) Revenue 10,697.5 12,599.7-15.1 8,698.3 23.0 EBITDA 1,824.6 1,682.5 8.4 891.8 104.6 EBITDA (%) 17.1 13.4 370 bps 10.3 680 bps PAT 171.3 62.4 LP -923.4 LP Key Financials ( Crore) FY15 FY16 FY17E FY18E Total Op. Income 52971.5 41878.9 56812.7 62297.6 EBITDA 9402.3 6073.0 9862.1 10968.9 Adj Net Profit 1843.7 1383.5 2295.9 3198.3 Adj EPS ( ) 76.3 57.2 95.0 132.3 Valuation summary FY15 FY16 FY17E FY18E PE (x) 17.5 NA 14.1 10.1 Target PE (x) 16.4 NA 13.2 9.5 EV/EBITDA (x) 6.9 11.5 6.7 6.2 P/BV (x) 1.4 1.5 1.3 1.2 Adj RoNW (%) 8.0 6.4 9.4 11.8 Adj RoCE (%) 10.3 4.8 10.6 11.5 Stock data Particular Amount Market Capitalisation 32267 crore Debt-Cons. (FY16P) 38461 crore Cash Cons. (FY16P) 1913 crore EV 69994 crore 52 week H/L 1380 / 800 Equity capital 241.72 crore Face value 10 Price performance (%) Return % 1M 3M 6M 12M JSW Steel 11.5 25.3 50.1 44.8 SAIL 10.6 9.8-13.5-36.5 Tata Steel 16.2 36.7 40.6-6.4 Performs well May 19, 2016 JSW Steel (JINVIJ) 1335 JSW Steel reported Q4FY16 numbers that were better than our estimates. While topline broadly came in line with our estimates, EBITDA, EBITDA margin, EBITDA/tonne and PAT came in higher than our estimates. Consolidated topline for the quarter came in at 10697.5 crore (down 15.1% YoY, up 23.0% QoQ and higher than our estimate of 10559 crore). Steel volumes came in at 3.3 million tonnes (MT), marginally higher than our estimate of 3.2 MT. Consolidated EBITDA came in at 1824.6 crore (up 8.4% YoY, 104.6% QoQ and higher than our estimate of 1417.9 crore). Consolidated EBITDA margin for the quarter was at 17.1%, higher than our estimate of 13.4%. EBITDA/tonne was at 5404/tonne, significantly higher than our estimate of 4500/tonne. The subsequent PAT came in at 171.3 crore, higher than our estimate of 31.8 crore. Sales volume guidance of 15 MT for FY17E, implying a growth of 24%... For FY17E, JSW Steel has guided crude steel production and saleable steel sales guidance of 15.75 MT and 15 MT respectively. The sales volume guidance looks optimistic considering moderate demand growth, threat of imports and capacity expansion by peer group companies such as Tata Steel, SAIL, etc. We have modelled sales volume of 14 MT for FY17E and 15 MT for FY18E. For FY16 JSW steel saleable steel sales volume stood at 12.1 MT. Elevated debt level remains area of concern Post the merger with Ispat Industries, the debt level of JSW Steel has increased significantly. On a consolidated basis, at the end of Q4FY16, the net gearing was at 1.78x while net debt to EBITDA was at 6.33x. On a standalone basis, at the end of Q4FY16, net gearing was at 1.41x while net debt to EBITDA was at 5.35x. EBITDA/tonne surprises positively; upgrade to HOLD JSW Steel reported better than expected EBITDA/tonne for Q4FY16 driven by improved product mix and cost optimization. For Q4FY16 value added products constituted ~36% of total sales volume. For FY17E we have modelled EBITDA/tonne of 6750/tonne, while for FY18E we have modelled EBITDA/tonne of 7000/tonne. We value the stock at 6x FY18E EV/EBITDA and arrive at a target price of 1250. We have a HOLD recommendation on the stock. Research Analyst Dewang Sanghavi dewang.sanghavi@icicisecurities.com ICICI Securities Ltd Retail Equity Research

esv Variance analysis Q4FY16 Q4FY16E Q4FY15 YoY (%) Q3FY16 QoQ (%) Comments Revenue 10,697.5 10,559.0 12,599.7-15.1 8,698.3 23.0 Topline came in broadly in line with our estimate Other Income 80.8 80.0 18.3 341.4 22.6 257.4 Other income broadly came in line with our estimate Employee Expense 363.9 377.8 380.4-4.4 368.2-1.2 Employee expense came in lower than our estimate Raw Material Expense 5,597.0 5,526.6 7,304.7-23.4 4,903.5 14.1 Power & Fuel Expense 862.4 1,042.0 1,067.4-19.2 671.6 28.4 Piwer and fuel expense came in lower than our estimate Other operating Expenses 2,049.6 2,194.7 2,164.7-5.3 1,863.2 10.0 Other operating expense came in lower than our estimate EBITDA 1,824.6 1,417.9 1,682.5 8.4 891.8 104.6 EBITDA came in higher than our estimate EBITDA Margin (%) 17.1 13.4 13.4 370 bps 10.3 680 bps EBITDA margin came in higher than our estimate Depreciation 793.8 746.4 898.2-11.6 773.4 2.6 Depreciation expense came in higher than our estimate Interest 833.5 748.8 857.9-2.8 810.7 2.8 Interest expense came in higher than our estimate Exceptional Item 1.1 0.0 25.9-95.6 2,122.1 NA PBT 277.0 2.7-81.2-441.1-2,791.8 LP Tax Outgo 127.0 0.9-112.3-213.1-1,810.0-107.0 PAT 150.0 1.8 31.1 382.3-981.8 LP Minority Interest, Share of Associate &Extra Ordinary Item 21.3 29.9 31.3-32.1 58.4-63.6 PAT for the Group 171.3 31.8 62.4 174.4-923.4 LP PAT came in higher than our estimate Key Metrics Steel Sales (MT) 3.3 3.2 3.1 5.9 2.6 26.3 Sales volume came in marginally higher than our estimate Standalone EBITDA/tonne ( /tonne) 5404 4500 5469-1.2 3443 57.0 EBITDA/tonne came higher than our estimate Change in estimates FY17E FY18E ( Crore) Old New % Change Introduced Comments Revenue 54,235 56,813 4.8 62,298 Upward revised FY17E revenue due to higher sales volume estimate EBITDA 9,724 9,862 1.4 10,969 EBITDA Margin (%) 17.9 17.4-57 bps 17.6 EBITDA ( /tonne) * 6750 6750 0.0 7000 Maintained EBITDA/tonne estimate PAT 1543 2296 48.8 3198 Upward revised FY17E PAT estimate EPS ( ) 63.8 95.0 48.8 132.3 Upward revised FY17E EPS estimate, *-Standalone entity Assumptions Current Earlier FY16 FY17E FY18E FY17E Comments Total Steel Sales (MT) 12.1 14.0 15.0 13.5 Downward revised FY16E sales volume estimate EBITDA/tonne ( /tonne) * 4,718 6,750 7,000 6,750 Downward revised FY16E and FY17E EBITDA/tonne estimate, *-Standalone entity ICICI Securities Ltd Retail Equity Research Page 2

Exhibit 1: Sales volume trend Company Analysis JSW Steel, post its merger with JSW Ispat, got catapulted to the position of one of the leading steel producers in India (combined steelmaking capacity of 14.3 MT). In terms of capacity wise break-up, out of 14.3 MT, 10 MT is in Vijayanagar, Karnataka [8.4 MT through blast furnace (BF) route with balance 1.6 MT through the Corex route], 3.3 MT in Dolvi, Maharashtra (erstwhile Ispat Industries) and 1 MT in Salem, Tamil Nadu. Currently company is in the process of expanding its capacity to 18 MT. Sales volume guidance of 15 MT for FY17E, implying a growth of 24%... For FY17E, JSW Steel has guided crude steel production and saleable steel sales guidance of 15.75 MT and 15 MT respectively. The sales volume guidance looks optimistic considering moderate demand growth, threat of imports and capacity expansion by peer group companies such as Tata Steel, SAIL, etc. We have modelled sales volume of 14 MT for FY17E and 15 MT for FY18E. For FY16 JSW steel saleable steel sales volume stood at 12.1 MT. Exhibit 2:..EBITDA/tonne to firm up going forward million tonne 16.0 15.0 14.0 14.0 12.1 12.0 10.0 8.0 6.0 4.0 2.0 0.0 FY16 FY17E FY18E /tonne 8000 7000 6750 7000 6000 4718 5000 4000 3000 2000 1000 0 FY16 FY17E FY18E Elevated debt level remains area of concern Post the merger with Ispat Industries, the debt level of JSW Steel has increased significantly. On a consolidated basis, at the end of Q4FY16, the net gearing was at 1.78x while net debt to EBITDA was at 6.33x. On a standalone basis, at the end of Q4FY16, net gearing was at 1.41x while net debt to EBITDA was at 5.35x. Exhibit 3: Gross debt & net debt trend crore 40000 35000 30000 25000 20000 15000 10000 5000 0 34762 34099 34885 32971 38461 37727 37911 33895 39911 35589 FY14 FY15 FY16 FY17E FY18E Gross Debt Net Debt ICICI Securities Ltd Retail Equity Research Page 3

Key takeaway from conference call JSW Steel has chalked out capex of 7000 crore for next two years, broken up as 4000 crore for FY17E and 3000 crore for FY18E. Some of key capex programmes are as follows Pipe conveyor system at Vijayanagar A pipe conveyor system for transporting iron ore from the yard near the mines to the Vijayanagar plant will be set up with a capacity of 20 Million tonnes per annum (Mtpa). This will be an environment friendly solution and reduce transportation costs of iron ore to the plant. The estimated project cost is 650 crore and is expected to be commissioned in a period of 24 months Water reservoir at Vijayanagar JSW Steel will build a water reservoir facility to augment the storage capacity of water at its Vijayanagar plant. The investment is strategic in nature for un-interrupted operations of the plant. The estimated project cost is 520 crore and is expected to be commissioned in a period of 26 months. Tinplate at Tarapur complex JSW Steel s subsidiary, JSW Steel coated products is setting up a Tin plate mill and related facilities at its Tarapur work to cater to the increasing demand for tin plate. The estimated project cost is 650 crore and is expected to be commissioned in a period of 24 months. Coke oven plant at Dolvi The company had earlier decided to setup a 3mtpa coke oven plant at Dolvi through Dolvi coke projects limited (DCPL). The company holds ~40% stake in DCPL. The first phase of the coke oven is 1.5mtpa which will take care of the open coke requirements for Dolvi and Vijaynagar. The company has got the EC of 3 million tonne coke oven plant which will eventually take care of capacity expansion of Dolvi from 5 MT to 10 MT. The total cost for the first phase of the plant is 2000 crore, with 700 crore of equity and the remaining being debt. JSW Steel s contribution is 500 crore. Going forward Chile and US coking coal operations will remain under pressure in near future, while, some improvement can be expected in US Plate and Pipe mills Amba river coke reported EBITDA of 166 crore during Q4FY16 The company highlighted that in FY17 net debt is going to move up on account of new Indian accounting standards. Excluding the impact of Ind- AS, net debt would have reduced YoY on 31st Mar 2017. Capital acceptance and revenue acceptances stood at US$447 million and US$1233 million respectively JSW Steel continues to get relaxation from most of the lenders regarding covenant testing. Current relaxation has led to Net Debt/EBITDA roadmap (as sought by the lenders) reducing from 6.75x in FY16 to 5x in FY17E and 4x in FY18E. Similarly desired Net Debt to Equity trajectory is 2.5x for 17E and 2x in FY18E. Interest costs for the company is 7.16% which is down 15bps YoY. Mine auction is expected to start in July 16. Total iron ore availability in Karnataka is likely to go up to 29 MT in FY17 ICICI Securities Ltd Retail Equity Research Page 4

Performance of subsidiaries JSW Steel Coated Products During the quarter, JSW Steel Coated Products registered production (galvanised/galvalume products) volume of 0.40 MT and sales volume of 0.42 MT. The gross turnover and net sales for the quarter were at 1996 crore and 1835 crore, respectively. It recorded an operating EBITDA of 95 crore and net profit after tax of 24 crore for the quarter. Chile iron ore mines The Chile operations remain under care and maintenance from end April 2015. The company reported an EBITDA loss of US$0.33 million for the quarter. US plate and pipe mill The US based pipe and plate mill facility produced 0.032 MT of plates and 0.011 MT of pipes, reporting capacity utilisation of 15% and 8%, respectively, in Q4FY16. Sales volumes for the quarter were at 0.030 MT of plates and 0.012 MT of pipes. The company has reported an EBITDA loss of US$ 10.20 million for the quarter. Project update During the year FY16, the company has commissioned Steek Melting Shop III (SMS-III) and balance portion of CRM-II including electrical steel complex at Vijayanagar. The three Blast Furnaces which were under shut down for refining and modification/capacity augmentation (one at each location viz Vijayanagar, Dolvi and Salem works) have been recommissioned and ramp up is progressing satisfactorily and are likely to complete as per schedule. ICICI Securities Ltd Retail Equity Research Page 5

Valuation JSW Steel reported better than expected EBITDA/tonne for Q4FY16 driven by improved product mix and cost optimization. For Q4FY16 value added products constituted ~36% of total sales volume. For FY17E we have modelled EBITDA/tonne of 6750/tonne, while for FY18E we have modelled EBITDA/tonne of 7000/tonne. We value the stock at 6x FY18E EV/EBITDA and arrive at a target price of 1250. We have a HOLD recommendation on the stock. Exhibit 4: Target price calculation Target Price Calculation Particular Unit Value EBITDA (JSW Steel & Ispat Combined) crore 10969 EV/EBITDA Multiple x 6.0 Enterprise Value (EV) crore 65813 Gross Debt crore 39911 Cash & Cash Eq crore 4322 Net Debt crore 35589 Implied Market Cap crore 30224 No of Shares crore 24.2 Target Price 1250 Exhibit 5: Valuation Matrix Sales ( Crore) Growth (% YoY) EPS ( ) Growth (% YoY) PE (x) EV/EBIDTA (x) P/ BV (x) RoNW (%) FY15 52971.5 3.4 76.3-14.8 17.5 6.9 1.4 8.0 10.3 FY16 41878.9-20.9 57.2 PL NM 11.5 1.5 6.4 4.8 FY17E 56812.7 35.7 95.0 66.0 14.1 6.7 1.3 9.4 10.6 FY18E 62297.6 9.7 132.3 39.3 10.1 6.2 1.2 11.8 11.5 RoCE (%) ICICI Securities Ltd Retail Equity Research Page 6

Company snapshot 1,600 1,400 1,200 Target Price: 1250 1,000 800 600 400 200 0 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Source: Bloomberg, Company, ICICIdirect.com Research Key events Date Event Dec-10 Acquires majority stake in Ispat Industries (capacity 3.3 MTPA) for a consideration of 2157 crore Mar-11 Coking coal price sky rocket touching highs of US$330/tonne on account of floods in Australia (Queensland) Jun-11 Iron ore mining ban imposed in Karnataka with NMDC being the only miner allowed to mine under supervision of Supreme Court of India Dec-11 Mines & Mineral (Development & Regulation) Bill introduced in Parliament. Proposes payment of amount equivalent to royalty for development of the areas in which the miners operate. Export duty increased to 30% iron ore exports from India Feb-12 JFE raises stake in JSW Steel to 15% Sep-12 JSW Steel merges JSW Ispat with itself. Share swap ratio fixed at 1:72 i.e. for every 72 shares of JSW Ispat one would get one share of JSW Steel Oct-13 Announces a price hike of ~ 2000/ tonne to mitigate the rising input costs (coking coal on account of currency depreciation) Dec-13 Announces a price hike of ~2% ( 700-1000/tonne) for its steel products effective from January 1, 2014 Feb-16 Moody's downgraded JSW Steel's credit rating by two notches from Ba1 to Ba3 Feb-16 JSW Steel recommisioned two of its blast furnaces at Vijaynagar and Salem which were shut since August and Novemeber 2015 for relining and modification Feb-16 ICRA downgraded the long term credit rating of the company to ICRA AA- from ICRA AA and reaffirmed the short term rating at ICRA A1+ Mar-16 CARE Ratings downward revised the long term credit rating of the company to CARE AA- from CARE AA, while reaffirming its short term rating at CARE A1+ Apr-16 Fitch Ratings downgraded the credit rating of JSW Steel from BB+ to BB Apr-16 The blast furnace at Dolvi was recommisioned after it was shut down for relining and modification in November 2015 Top 10 Shareholders Shareholding Pattern Rank Name Latest Filing Date % O/S Position (m) Change (m) (in %) Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 1 Jindal Organisation 31-Dec-15 0.21 50.9 0.4 Promoter 39.6 40.0 40.0 40.4 41.5 FII 19.9 19.0 19.0 18.5 17.2 2 JFE Steel Corporation 31-Dec-15 0.15 36.3 0.0 DII 4.1 4.2 4.2 5.3 5.2 3 Vividh Consultancy & Advisory Services Pvt. Ltd. 31-Dec-15 0.06 13.9 0.0 Others 36.5 36.8 36.8 35.8 36.2 4 Sahyog Tradecorp Pvt. Ltd. 31-Dec-15 0.05 11.0 0.0 5 M. M. Warburg Bank (Schweiz) AG 31-Dec-15 0.05 10.9-1.2 6 Danta Enterprises Pvt. Ltd. 31-Dec-15 0.03 6.0 0.0 7 Virtuous Tradecorp Pvt. Ltd. 31-Dec-15 0.03 6.0 0.0 8 JSW Techno Projects Management, Ltd. 1-Sep-15 0.02 5.0 5.0 9 Gagandeep Credit Capital Pvt. Ltd. 31-Dec-15 0.02 4.6 0.0 10 Dimensional Fund Advisors, L.P. 29-Feb-16 0.02 4.2 0.0 Source: Reuters, ICICIdirect.com Research Recent Activity Buys Sells Investor Name Value (M) Shares(M) Investor Name Value (M) Shares(M) Invest AD 40.7 2.6 M. M. Warburg Bank (Schweiz) AG -18.3-1.2 Jindal Organisation 6.5 0.4 IDFC Asset Management Company Private Limited -9.0-0.5 Life Insurance Corporation of India 4.3 0.3 Norges Bank Investment Management (NBIM) -5.7-0.4 Reliance Capital Asset Management Ltd. 2.9 0.2 Raiffeisen Kapitalanlage-Gesellschaft mbh -1.5-0.1 Amundi Asset Management 0.5 0.0 J.P. Morgan Asset Management (Hong Kong) Ltd. -0.8-0.1 Source: Reuters, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 7

Financial summary (Cons.) Profit and loss statement ( crore) (Year-end March) FY15 FY16 FY17E FY18E Total operating Income 52,971.5 41,878.9 56,812.7 62,297.6 Growth (%) 3.4-20.9 35.7 9.7 Raw Material Expenses 29,686.0 22,750.6 31,129.9 34,264.0 Employee Expenses 1,532.8 1,568.0 2,183.3 2,430.9 Power and Fuel Costs 4,123.1 3,665.9 5,529.6 6,303.1 Mfg and Other expenses 8,227.3 7,821.3 8,107.7 8,330.7 Total Operating Expenditure 43,569.2 35,805.9 46,950.5 51,328.7 EBITDA 9,402.3 6,073.0 9,862.1 10,968.9 Growth (%) 2.6-35.4 62.4 11.2 Depreciation 3,434.5 3,187.9 3,308.9 3,495.8 Interest 3,493.0 3,302.7 3,314.5 3,411.1 Other Income 111.4 168.2 160.0 200.0 PBT 2,586.2-249.4 3,398.7 4,262.0 Exceptional Item -47.1-2,125.4 0.0 0.0 Total Tax 819.4-1,524.1 1,121.6 1,065.5 Reported PAT Before MI 1,719.7-850.8 2,277.1 3,196.5 Profit/(loss) - JV/MI/Associate 76.9 108.8 19.1 1.1 Reported PAT After MI 1,796.6-741.9 2,296.3 3,197.6 Growth (%) 297.5 PL -409.5 39.3 Adj PAT after MI 1,843.7 1,383.5 2,296.3 3,197.6 Adj 'EPS ( ) 76.3 57.2 95.0 132.3 Balance sheet ( crore) (Year-end March) FY15 FY16 FY17E FY18E Liabilities Share Capital 1,067.2 1,067.2 1,066.8 1,066.8 Reserve and Surplus 21,986.9 20,576.7 23,275.7 26,106.0 Total Shareholders funds 23,054.1 21,643.9 24,342.5 27,172.8 Total Debt 34,884.6 38,461.0 37,911.0 39,911.0 Deferred Tax Liability 3,154.7 1,420.2 1,420.2 1,420.2 Minority Interest / Others 778.9 794.4 844.4 894.4 Total Liabilities 61,872.3 62,319.5 64,518.0 69,398.3 Assets Gross Block 74,810.4 82,944.3 88,944.3 91,844.3 Less: Acc Depreciation 24,659.0 27,846.9 31,155.8 34,651.5 Net Block 50,151.5 55,097.4 57,788.5 57,192.8 Capital WIP 8,704.7 4,704.7 2,704.7 2,804.7 Total Fixed Assets 58,856.2 59,802.1 60,493.3 59,997.5 Investments 599.3 618.4 718.4 818.4 Inventory 11,009.0 8,403.4 12,366.7 14,550.5 Debtors 2,499.8 2,801.6 4,358.2 5,461.7 Loans and Advances 8,922.9 7,904.7 8,554.7 9,254.7 Other Current Assets 268.2 799.0 1,074.0 1,349.0 Cash 1,913.2 734.0 4,016.4 4,321.6 Total Current Assets 24,613.1 20,642.7 30,370.1 34,937.5 Current Liabilities 23,690.6 19,697.2 28,017.2 27,308.6 Provisions 356.3 278.0 278.0 278.0 Total Current Liabilities 24,046.9 19,975.1 28,295.2 27,586.5 Net Current Assets 566.2 667.5 2,074.9 7,351.0 Others Assets 1,850.6 1,231.4 1,231.4 1,231.4 Application of Funds 61,872.3 62,319.5 64,518.0 69,398.3 Cash flow statement ( crore) (Year-end March) FY15 FY16 FY17E FY18E Profit after Tax 1,796.6-741.9 2,296.3 3,197.6 Add: Depreciation 3,434.5 3,187.9 3,308.9 3,495.8 (Inc)/dec in Current Asset -2,831.3 2,791.2-6,445.0-4,262.3 Inc/(dec) in CL&Provisions 6,367.0-4,071.7 8,320.0-708.6 Others 766.0-1,744.1 0.0 0.0 CF from operating activities 9,532.8-578.7 7,480.2 1,722.4 (Inc)/dec in Investments 63.5-19.2-100.0-100.0 (Inc)/dec in Fixed Assets -7,406.8-4,133.9-4,000.0-3,000.0 Others -311.9 735.2 50.0 50.0 CF from investing activities -7,655.1-3,417.8-4,050.0-3,050.0 Issue/(Buy back) of Equity 0.0 0.0-0.4 0.0 Inc/(dec) in loan funds 122.8 3,576.4-550.0 2,000.0 Dividend paid & dividend tax -339.0-240.0-367.3-367.3 Inc/(dec) in Sec. premium -341.8-428.2 770.0 0.0 Others -69.4-90.9 0.0 0.0 CF from financing activities -627.4 2,817.3-147.7 1,632.7 Net Cash flow 1,250.3-1,179.3 3,282.5 305.2 Opening Cash 663.0 1,913.2 734.0 4,016.4 Closing Cash 1,913.2 734.0 4,016.4 4,321.6 Key ratios (Year-end March) FY15 FY16 FY17E FY18E Per share data ( ) Adj EPS 76.3 57.2 95.0 132.3 Cash EPS 216.4 101.2 231.9 276.9 BV 953.8 895.4 1,007.1 1,124.1 DPS 11.0 7.5 12.0 12.0 Cash Per Share 79.2 30.4 166.2 178.8 Operating Ratios (%) EBITDA Margin 17.7 14.5 17.4 17.6 PBT / Total Operating income 4.9-0.6 6.0 6.8 Adj PAT Margin 3.5 3.3 4.0 5.1 Inventory days 135 135 145 155 Debtor days 17 24 28 32 Creditor days 163 172 180 160 Return Ratios (%) Adj RoE 8.0 6.4 9.4 11.8 Adj RoCE 10.3 4.8 10.6 11.5 RoIC 10.7 4.9 11.3 11.9 Valuation Ratios (x) P/E 17.5 NM 14.1 10.1 EV / EBITDA 6.9 11.5 6.7 6.2 EV / Net Sales 1.2 1.7 1.2 1.1 Market Cap / Sales 0.6 0.8 0.6 0.5 Price to Book Value 1.4 1.5 1.3 1.2 Solvency Ratios Debt/EBITDA 3.7 6.3 3.8 3.6 Debt / Equity 1.5 1.8 1.6 1.5 Current Ratio 1.0 1.0 1.1 1.3 Quick Ratio 0.6 0.6 0.6 0.7 ICICI Securities Ltd Retail Equity Research Page 8

ICICIdirect.com coverage universe (Metals & Mining) CMP M Cap EPS ( ) P/E (x) EV/EBITDA (x) ROCE(%) ROE(%) Company ( ) TP ( ) Rating ( Cr) FY15 FY16 FY17E FY15 FY16 FY17E FY15 FY16 FY17E FY15 FY16 FY17E FY15 FY16 FY17E Hindalco Industries 89 65 Hold 18409 13.5 3.5 9.0 6.0 23.1 8.9 8.0 9.5 7.1 5.0 3.4 5.3 2.2 1.9 4.6 Hindustan Zinc 168 175 Hold 70959 19.4 19.3 16.0 8.9 8.9 10.8 5.7 5.7 6.7 20.9 21.6 18.9 18.9 21.8 16.1 JSW Steel 1309 1250 Hold 31649 76.3 57.2 95.0 17.5 NM 14.1 6.9 11.0 6.7 10.3 4.8 10.6 8.0 6.4 9.4 NMDC 93 95 Hold 36696 16.2 10.3 11.0 6.1 9.5 8.9 2.6 4.7 5.4 23.6 13.3 13.8 19.9 12.1 12.3 SAIL 42 35 Sell 17451 5.1-4.9 2.8 9.9 NA 17.7 10.4 106.4 8.1 4.0-2.3 4.3 4.9-4.7 2.8 Vedanta 99 100 Hold 29650 19.8 7.3 1.9 5.2 14.2 53.0 4.5 6.2 6.5 11.3 6.5 5.9 10.9 4.8 1.3 Tata Steel 329 325 Hold 31964 NM 4.4 19.7 NM 60.8 13.7 7.8 9.4 6.8 5.8 4.0 6.4 0.0 1.2 5.2 ICICI Securities Ltd Retail Equity Research Page 9

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Disclaimer ANALYST CERTIFICATION We /I, Dewang Sanghavi, MBA (FIN) research analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Terms & conditions and other disclosures: ICICI Securities Limited (ICICI Securities) is a Sebi registered Research Analyst having registration no. INH000000990. ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. 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Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this company, or in certain other circumstances. This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever for any loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice. ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months. ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction. ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the companies mentioned in the report in the past twelve months. ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts have any material conflict of interest at the time of publication of this report. It is confirmed that Dewang Sanghavi, MBA (FIN) research analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. ICICI Securities or its subsidiaries collectively or Research Analysts do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report. Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject company/companies mentioned in this report. It is confirmed that Dewang Sanghavi, MBA (FIN) research analysts do not serve as an officer, director or employee of the companies mentioned in the report. ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report. We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. 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