Buy Tata Steel; target of Rs 840: Prabhudas Lilladher

Prabhudas Lilladher's research report on Tata Steel

Tata Steel (TATA) reported Q2FY19 earnings above our estimates on the back of beat in standalone operations. Domestic operations reported 10% QoQ rise in EBITDA/t to Rs18,856/t (PLe:Rs17,325/t) due to better than expected realisations. Realisations are expected to remain stable on the back of currency depreciation and likely increase in global prices ahead of winter cuts in China. We upgrade our EBITDA estimates for FY19e/FY20e by 8%/7% to factor in higher margins in domestic operations.

Outlook

We reiterate BUY with TP of Rs840, EV/EBITDA 6x FY20e.

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