We expect GPIL to benefit from earnings CAGR of 50% over FY10-FY12 on volume growth and margin expansion driven by the recently commissioned Ari Dongri mine, 0.6mntpa pellet plant, and 20MW biomass power plant.

The 0.6mntpa pellet plant of 75% subsidiary Ardent Steel to provide additional earnings growth (not factored in our estimates).

At CMP of Rs175, the stock is attractively valued at 3.3x FY12E EV/EBITDA. We recommend 'BUY' with a target price of Rs276 (4.5x FY12E EV/EBITDA).