Motilal Oswal's report on Tata Steel
"Consolidated 2QFY15 adjusted EBITDA increased 5% YoY to INR38.8b, largely on account of expansion in margin, courtesy Indian business, while volumes were stable. This was below estimate on disappointing adj. EBITDA (INR1.4b loss v/s est. of INR1b profit) of South East Asian (SEA) operations under pressure from cheap Chinese imports into the region. Adjusted PAT declined 37% YoY to INR5.8b due to higher interest and effective tax rate."
"We have cut the consolidated EBITDA by 5%/2% for FY15E/16E. Target price is cut by 4% to INR593. Net debt has stabilized on EBITDA improvement, peaking of capex and monetization of non-core assets. Stock is trading at FY16E EV/EBITDA of 6.3x. Maintain Buy for target price of Rs 593", says Motilal Oswal research report.
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