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What should investors do with Tata Steel post Q4 results: Buy, sell or hold?

Consolidated revenue from operations stood at Rs 49,977.4 crore, up 38.8 percent YoY.

May 06, 2021 / 09:55 AM IST
 
 
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Tata Steel share price touched a 52-week high of Rs 1,128.80, rising over 5 percent in early trade on May 6 a day after the company reported its Q4 numbers.

The company on May 5 posted a consolidated profit of Rs 6,644.1 crore for the quarter ended March 2021 compared to a loss of Rs 1,481.3 crore in the year-ago quarter.

Consolidated revenue from operations stood at Rs 49,977.4 crore, up 38.8 percent YoY.

Also Read - Tata Steel posts profit of Rs 6,644 crore for Q4; revenue, operating earnings beat estimates

Here is what brokerages have to say about the stock and company after the March earnings:

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Morgan Stanley | Rating: Overweight | Target: Rs 1,000

Consolidated EBITDA was in line as India performed better than expectations but Europe missed estimates.

The cash flow was robust and the dividend payout is one of the highest in the last few years.

Investec | Rating: Buy | Target: Rs 1,175

The best is ahead as it’s a preferred ferrous proxy. The operational beat was across regions. The strong CF generation aids balance sheet deleveraging.

Macquarie | Rating: Outperform | Target: Rs 1,045

It was a solid quarter with a constructive outlook. The earnings outlook particularly for EU contract will be key to watch. While, domestic demand outlook, expansion capex & timelines will be the key.

CLSA | Rating: Buy | Target: Rs 1,150

The Q4 consolidated EBITDA was 11% above estimate, while debt reduction remained strong. Most businesses performed better than estimates. It reported the best-ever standalone profitability & Q1 likely to be even stronger.

Europe business was largely in line, while clarity is awaited on several issues. The deleveraging is on track with the focus now shifting to expansion projects.

Jefferies | Rating: Buy | Target: Rs 1,125

The Q4 adjusted EBITDA rose 68% QoQ & 18% above our estimate. The rising steel prices drove sequentially higher EBITDA across businesses.

The recurring net profit rose 95% QoQ & 31% above our estimate. It generated a free cash flow of Rs 8,800 crore in Q4 with net debt fell by Rs 90 per share.

JPMorgan | Rating: Overweight | Target: Rs 1,250

The company reported a massive beat in Q4 with consolidated EBITDA at Rs 14,180 crore versus the consensus of Rs 12,800 crore.

H1FY22 should be very strong and dividend of Rs 25 per share is an all-time high.

Motilal Oswal | Rating: Neutral 

Tata Steel Europe posted an EBITDA of Rs 11.9 billion (versus estimated Rs 31.3 billion) as against a loss of Rs 7.2 billion in Q3 FY21. EBITDA/t stood at USD 66/t (versus estimated USD170/t).

The miss on EBITDA was led by a miss on realization as only one-fourth of the QoQ increase in EU steel prices was reflected in TSE. This was due to contracts fixed earlier at lower prices

At 09:54 hrs Tata Steel was quoting at Rs 1,120, up Rs 51.05, or 4.78 percent on the BSE.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Moneycontrol News
first published: May 6, 2021 09:36 am

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