Neutral Tata Steel; target of Rs 94: Motilal Oswal

Motilal Oswal recommended Neutral rating on Tata Steel with a target price of Rs 94 in its research report dated November 01, 2022.

Broker Research

November 02, 2022 / 18:53 IST

Motilal Oswal's research report on Tata Steel

TATA reported a weak but inline quarter as domestic ASP took a breather after imposition of export duty. Standalone results were below estimates; while the Europe business was weak QoQ, but it was on expected lines. TATA’s standalone revenue at INR322b was 1% lower YoY, but was up 1% QoQ, and in line with our estimate of INR 317b. Standalone EBITDA stood at INR48b, down 64% YoY and 49% QoQ. A sharp ASP decline of INR14,660/y QoQ led to INR 14,445/t correction in EBITDA/t. EBITDA was 11% lower than our estimate. EBITDA/t came at INR 10,177/t, down 67% YoY and 59% QoQ, and ~INR 1300/t below our estimates. Adjusted PAT stood at INR27b, down 70% YoY and 57% QoQ, owing to lower EBITDA. Adjusted PAT was 7% lower than our estimate.

Outlook

We reiterate our Neutral call on the stock with revised a SoTP-based TP of INR 94 (v/s 91 previously).

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