Tata Steel stock gains: How brokerages analyse Q4 earnings

Tata Steel is gaining buyers' interest post its January-March quarter earnings. Steel surprised the street with its operational performance in the January-March quarter earnings. Even its subsidiary Corus turned positive on an EBITDA per tonne basis. At opening, the stock surged 5.2 percent on the BSE.

Here is what brokerages say about the January-March quarter earnings:

Morgan Stanley

It remains overweight on Tata Steel and believes that fixed cost reduction initiatives at Corus are starting to bear fruit. "Indian operations are displaying sustainable cost reduction while increasing their share in Tata's overall volumes," it explains.

Macquarie

Macquarie has maintained an 'underperform' rating with a 12-month price target Rs 280. It has revised consolidated earnings per share (EPS) by +3 percent, -2 percent for FY14, 15E. It iterates that Tata Steel's
 high debt/equity of 1.6 makes the business risky in the current uncertain environment.

Bank of America- Merrill Lynch

The firm has assigned an 'underperform' rating  on Tata Steel stating that  its India's margins is likely to decline due to lower domestic steel prices, inelastic costs and as part of the fourth quarter cost decline may not sustain.  BoAML also adds that margins may remain under pressure decline over next few quarters.

BNP Paribas

BNP Paribas believes that key upside risks of Tata Steel are higher steel prices and a faster than expected turnaround at Corus. The brokerage say that weak macroeconomic conditions in Europe will lead to continuing weakness. "Steep decline in other expense in India seems largely one-off and needs to be tested in quarters ahead. Costs declined USD118/t quarter-on-quarter but feels  only USD9/t may be structural," it elaborates.