Buy Tata Steel; target of Rs 558: Angel Broking

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Buy Tata Steel; target of Rs 558: Angel Broking

Angel Broking is bullish on Tata Steel and has recommended buy rating on the stock with a target of Rs 558 in its February 10, 2012 research report.

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RELATED NEWS Buy Marico; target Rs 185: Motilal Oswal Buy Power Finance Corporation; target Rs 250: Motilal Oswal Accumulate ILandFS Trans; target of Rs 222: Emkay ALSO READ See previous views by Angel Broking See what other Experts & Brokerages are saying about Tata Steel See messages about Tata Steel Tata Steel BSE | NSE 29/05/12 Are Mutual Funds betting on Tata Steel?

Angel Broking is bullish on Tata Steel and has recommended buy rating on the stock with a target of Rs 558 in its February 10, 2012 research report.

"Tata Steel reported net loss on a consolidated basis during 3QFY2012 due to weak performance from its Tata Steel Europe (TSE) and Southeast Asian operations. Nevertheless, we continue to maintain our positive stance on Tata Steel and recommend Buy on the stock."

"Tata Steel's consolidated net sales increased by 13.8% yoy to Rs33,103cr, above our estimate of Rs30,992cr, mainly on account of increased average realization in rupee terms. Standalone net sales increased by 12.3% yoy to Rs8,305cr. Tata Steel India's average realization/tonne increased by 12.8% yoy to Rs46,591; however, TSE's average realization/tonne decreased by 0.6% yoy to US$1,149 on account of subdued demand in Europe. EBITDA/tonne decreased by 7.1% to US$303 in Tata Steel India. TSE's EBITDA/tonne stood at US$(1) compared to US$25 in 3QFY2011 on account of higher raw-material costs and inventory write-down of US$143mn. Consequently, consolidated EBITDA decreased by 49.9% yoy to Rs1,717cr. Owing to losses at TSE and Southeast Asian operations, Tata Steel reported net loss of Rs603cr in 3QFY2012 compared to adjusted PAT of Rs1,125cr in 3QFY2011 on a consolidated basis."

"Steel prices rose by ~7.0% in Europe during CY2012, while prices of coking coal have declined over the past three quarters. These factors, coupled with inventory write-down during 3QFY2012, are expected to result in better financial performance at TSE in the coming quarters. Moreover, firm steel prices coupled with the decline in coking coal prices is expected to benefit the profitability of its India operations. We maintain our Buy rating on the stock with a revised SOTP target price of Rs558," says Angel Broking research report. 

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