Edelweiss is bullish on Tata Steel has recommended buy rating on the stock with a target price of Rs 650 in its research report dated May 16, 2017.
Edelweiss' research report on Tata Steel
Tata Steel’s Q4FY17 EBITDA at INR70bn (highest since Q2FY09) surpassed consensus owing to strong EBITDA at domestic operations (INR 13,586/t) and turnaround in European operations. Though we estimate quarterly EBITDA run rate over FY18‐19 to improve to INR 40‐50bn (from INR 30‐40bn), Q4FY17 EBITDA number is unlikely in the near term as international steel prices are under pressure.
Factoring in Q4FY17 performance, we revise up FY18E/FY19E EBITDA 1%/7%. Maintain ‘BUY’ with revised SoTP based TP of INR 650 (INR 637 earlier), implying an exit multiple of 6.4x FY19E—at a discount to peers’ 7.0x average.
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