Reduce Tata Steel; target of Rs 349: Emkay

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26 Aug, 2025 12:21

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Emkay Global Financial Services is bearish on Tata Steel and has recommended reduce rating on the stock with a target of Rs 349 in its October 8, 2012 research report.

“Tata Steel expects incremental volume addition to be visible in H2FY13. The company has been maintaining that there would be additional volume of 1mt for FY13 from the new capacity. Coke oven battery no. 10 (the 1st one) should start in end Q3 with a capacity of 0.7 mt. No. 11 coke oven battery to come during Q1FY14.The company plans to spend ~US$400 mn in FY13 and ~US$220 mn in FY14 on Jamshedpur brownfield project and has already capitalized Rs 60- 65 bn.”

“Total project cost for 1st phase (3 mtpa) is Rs 220 bn. Target commissioning in CY14. D/E is 70:30. Process for financial closure is underway. Capex US$1 bn each in FY13 and FY14. So far ~US$950 mn has been spent on Orissa project. Q2 and Q3FY13 are going to be tough quarters in terms of both volume and margins. FY13 volume likely to be within 13-13.5 mt. BF-4 at Port Talbot is expected to be commissioned during Q4FY13. Coal from Benga is expected to start meaningful contribution from FY16 onwards with total supply of 3 mt; New Millennium iron ore is likely to start during Q4FY13.”

“We have been reiterating our concerns on the volume growth both in Europe and India as well. We keep our FY13 volume estimates at 7.2 mt and 13 mt for India and Europe respectively. Believe, margins pressure to be visible both for domestic and overseas operations in Q2FY13 results. Higher inventory build- up in the system could pose threat to prices going forward. We estimate 1.72 mt sales and US$292 EBITDA/ tonne for India and 3 mt sales and -US$4 EBITDA/ tonne for Europe for Q2FY13. Keeping our FY14 estimates same, continue to value Indian ops at 6xFY14 and Europe and others 4xFY14 EV/ EBITDA. Maintain reduce with a TP of Rs 349/ share,” says Emaky Global Financial Services research report.

FIIs holding more than 30% in Indian cos 

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