Neutral Tata Steel; target of Rs 115: Motilal Oswal

Motilal Oswal recommended Neutral rating on Tata Steel with a target price of Rs 115 in its research report dated February 07, 2023.

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February 10, 2023 / 15:18 IST

26 Aug, 2025 12:21

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Motilal Oswal's research report on Tata Steel

TATA reported a weak financial performance in 3QFY23, missing our estimates. It was affected by lower realizations, higher input costs, higher interest expenses and depreciation, and higher freight and handling charges. TATA’s standalone revenue was down 5% YoY/6% QoQ at INR305b, in line with our estimate of INR292b. Standalone EBITDA was down 57% YoY and up 7% QoQ at INR52b (15% miss). ASP declined by INR8,837/t YoY. EBITDA/t was down 61% YoY at INR11,241/t, missing our estimate by INR2,643/t. APAT was down 66% YoY and up 1% QoQ at INR27b (26% miss), due to lower EBITDA and higher interest expenses and depreciation. Tata Steel Europe (TSE) missed our estimates significantly. TSE posted an operating loss of INR15.6b, as ASP declined by USD219/t QoQ and USD141/t YoY, along with a corresponding hike of USD/136t YoY in the overall costs. TATA’s consolidated revenue was down 6% YoY/5% QoQ at INR571b, an 11% miss on our estimate of INR643b. EBITDA declined 75% YoY and 33% QoQ to INR40b, missing our estimate by 59%. Consolidated EBITDA/t was down 75% YoY and 32% QoQ at INR5,661. TATA posted a loss of INR24b against our estimate of a INR43b profit, due to higher deferred tax (INR21.5b mainly relating to BSPS with Tata Steel UK) and margin compression at TSE. Gross debt was stable QoQ at INR876b (INR875b in 2QFY23) and net debt stood at INR717b. Net debt/EBITDA stood at 1.76x

Outlook

We reiterate our Neutral rating on the stock and lower our SoTP-based TP to INR 115 (v/s INR123 previously).

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