Motilal Oswal's research report on Tata Steel
Tata Steel (TATA) reported a strong 1QFY23 with both India and European operations beating our and consensus estimates. European operations especially posted the highest ever EBITDA/t and for the first time in the history, since being acquired, reported EBITDA/t higher than that of the parent. TATA’s standalone revenue at INR320b was 16% higher YoY but was down 13% QoQ. The YoY growth was driven by 19% growth in blended ASP offset by 3% decline in sales volume. The sequential revenue decline was led by 22% volume decline offset by ASP growth of 10%. The revenue beat our estimates by 7% on account of 7% ASP beat. Standalone EBITDA stood at INR96b down 28% YoY and 22% QoQ. The decline in EBITDA was largely due to higher coking coal cost. EBITDA/t for the quarter stood at INR24,622, down 26% YoY and flat QoQ. EBITDA was 25% higher than our estimate driven by 7% topline beat.
Outlook
We maintain our Neutral rating with a revised SoTP-based TP of INR1,055 (up from INR975 earlier).
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