Motilal Oswal recommended Neutral rating on Tata Steel with a target price of Rs 328 in its research report dated July 01, 2020.
Motilal Oswal 's research report on Tata Steel
Tata Steel’s (TATA) 4Q EBITDA rose 28% QoQ to INR46.5b and surprised positively led by improved performance in Europe and Bhushan. Near term earnings outlook is weak due to lower domestic demand necessitating higher exports which adversely impacts EBITDA. Moreover, leverage remains discomforting at 8x of FY21 EBITDA. Given the challenges in Europe, we cut our FY21/22 EBITDA estimates marginally and maintain our Neutral rating on the stock.
Despite curtailing growth capex, we expect net-debt/ EBITDA to remain high at 8.1x in FY21 and 4.7x in FY22. Maintain Neutral with a TP of INR328/sh (based on SOTP).
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