Buy Tata Steel; target of Rs 690: Axis Direct

Axis Direct's research report on Tata Steel

Tata Steel’s Q1FY18 consolidated EBITDA at Rs 50 bn (up 53% YoY) was higher than our and consensus estimates largely due to higher profitability at its downstream subsidiaries and forex translation gains.

Outlook

We remain bullish on India steel, as definitive anti-dumping duty for next 4 years will benefit large domestic steel mills, providing floor price to domestic steel players. Further, capacity utilization of domestic steel industry is poised to hit 90% in the next 3 years, as no new major capacity is coming up. Confluence of anti-dumping regime and supply shortage will firm up steel pricing over the next 3 years.