Broking house, Edelweiss Securities is bullish on Tata Steel . It has reiterated buy rating on the stock.
The Edelweiss report on Tata Steel:
"Tata Steel's Q2FY07 results were above our expectations. Despite flat sales volumes, topline for the quarter rose 8% Y-o-Y to Rs 41.9 billion, on the back of enriched product mix driving higher blended realisations. EBITDA for the quarter rose 3% Y-o-Y (and 8% Q-o-Q) to Rs 17 billion and EBITDA margin fell 180bps to 40.7% (30bps up Q-o-Q)."
"The company reported a 5.4% Y-o-Y (15% Q-o-Q) growth in PAT to Rs 11 billion, which is above our expectations. On a consolidated basis, Tata Steel reported revenue growth of 17% Y-o-Y to Rs 60 billion, EBITDA growth of 4% Y-o-Y to Rs 18.5 billion, and PAT growth of 2% Y-o-Y to Rs 11.4 billion."
"Tata Steel will continue to benefit from stable and firm steel prices, its integrated low cost structure, enriched product mix, market leadership in high value-added product segments, and a strong pipeline of growth projects, both organic as well as inorganic. At CMP of Rs 490, the stock is trading at an EV/EBITDA of 3.6x and P/E of 6.6x FY07E earnings and continues to look attractive. We reiterate our 'Buy' recommendation."
