Prabhudas Lilladher's research report on Tata Steel
Led by better than expected performance in domestic operations, TATA steel (TATA) reported 6%/8% beat on our/consensus EBITDA estimates. Consolidated EBITDA grew 48% QoQ at Rs141.8bn (PLe:Rs130.9bn). PAT doubled QoQ to Rs76.4bn (PLe:Rs70.1bn). Beat was largely led by strong show in standalone/TATA steel BSL operations with EBITDA at Rs91.9bn/Rs25.8bn (PLe:Rs86.7bn/Rs22.7bn), up 37% QoQ/58% QoQ. However, TATA Steel Europe (TSE) operations marginally fell short of expectation due to reversal of gain of £47mn recognised on monetisation of carbon credit receipts in Q1FY21.
Outlook
In this backdrop, TATA would be the key beneficiary on back of its integrated operations. TSE would also report better profitability given its high dependence on steel prices. Underpinned by strong steel outlook and comfortable B/S, we maintain Accumulate rating with TP of Rs1,330, EV/EBITDA of 5.7x FY23e.
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