Prabhudas Lilladher is bullish on Tata Steel has recommended buy rating on the stock with a target price of Rs 835 in its research report dated February 09, 2018.
Prabhudas Lilladher's research report on Tata Steel
Tata Steel (TATA) reported stronger than expected earnings on the back of higher margins in domestic operations. Margins in domestic operations rose to Rs14,000/t (PLe:Rs12,040) on the back of surprisingly lower RM cost. We increase our FY18e/FY19e EBITDA estimates by 6%/9% due to 8%/12% increase in EBITDA/t estimates of Indian operations. We remain extremely positive on the sector given the structural supply controls imposed by Chinese authorities and firm global demand. Positive restructuring of TATA Steel Europe (TSE) and increased focus on Indian operations with a goal to double the capacity (through organic and inorganic route) in next five years makes TATA one of the best candidate to play the strength in steel sector.
We reiterate BUY with TP of Rs835, EV/EBITDA 7x FY20E.
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