We expect Usha Martin to benefit from 33% volume CAGR over FY10-FY12E and an improved cost structure, with completion of capacity expansion of metallics by 0.4mtpa and steel by 0.6mtpa and full integration from mineral resources to value-added products.

We estimate EBITDA to grow at a CAGR of 36% and EPS of 42% over FY10-FY12.

International subsidiaries are expected to perform better in FY11 with OPM of ~21%.

Increased output from captive iron ore and coal mines post monsoon to further aid in margin expansion.

We believe that at CMP of Rs73, 3.4x FY12E EV/EBITDA, the stock is attractively valued. Recommend 'BUY' with a target price of Rs120 (5x FY12E EV/EBITDA).