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Last Updated : Oct 15, 2018 04:29 PM IST | Source: Moneycontrol.com

Buy Tata Sponge; target of Rs 1160: Centrum

Centrum is bullish on Tata Sponge has recommended buy rating on the stock with a target price of Rs 1160 in its research report dated October 12, 2018.

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Centrum's research report on Tata Sponge


We maintain Buy on Tata Sponge (TSIL) with a revised TP of Rs1160. Q2 results were weak due to exceptional circumstances which led to high iron ore and maintenance cost. Overall, we expect strong operational performance during FY19-20E led by robust pricing, healthy spreads and increasing volumes as additional EC clearance of 40ktpa is expected soon. Clarity on capex towards the build-up of new steel complex is still elusive but strong cash rich balance sheet provides comfort. Valuations remain attractive at 2.3x FY20E EV/EBITDA making risk-reward favorable.


Outlook


We revise our TP to Rs1160 and maintain buy. Key downside risks are fall in sponge iron prices and higher coal costs.


For all recommendations report, click here



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First Published on Oct 15, 2018 04:29 pm
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