IIFL has maintained its buy rating on Tata Steel with a 12-month target price of Rs 870 in its July 1, 2008 research report. "Tata Steel explained that higher other expenditure at its subsidiary was partly due to a one-time increase in pension liability. Adjusted for this item, recurring EBITDA for 4Q was Rs 49.4 billion, 12% higher than the reported figure and ahead of our estimate of Rs 46.5 billion."

"At Corus, increase in realisation was in line with cost increases. Tata Steel expects to achieve a USD 600 million increase in Corus’s EBITDA in FY09. Tata Steel’s current valuations—PE of 6.7x and EV/EBITDA of 5.6x on FY09ii—are attractive, with PE at a 33% discount to global peers. We expect this discount to narrow, as firm steel prices in Europe improve Corus’s earnings visibility. Retain Buy with a 12 month target of Rs 870," says IIFL's research report.

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