Angel Broking's report on Tata SteelFor 1QFY2016, Tata Steel’s standalone sales volume increased 2% yoy at 2.14MT, while blended realisation declined by 15% to `42,434/tonne, resulting in a 13% yoy decline in revenue. Raw material expenses however were below our estimates at `2,368cr, on account of lower than estimated consumption of imported iron ore (0.3MT vs our estimate of 0.8MT). Staff costs for the quarter declined by 4.2% yoy to `1082cr. Despite an increase in other operating expenses, the fall in raw material expenses and staff costs resulted in the EBITDA margin coming in higher than expected at ~18.6%, (vs our estimate of ~15.9%).Outlook and valuation: We downgrade our recommendation on the stock to ‘Neutral’ led by sustained pressure on steel realisations and high leverage levels, says Angel Broking research report.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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