Neutral Tata Steel; target of Rs 965: Motilal Oswal

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Motilal Oswal's research report on Tata Steel

We believe Tata Steel standalone’s 1HFY23 EBITDA is likely to contract by 66% over 1HFY22 driven by lower ASP, lower demand and peak coking coal costs and high base effect. India operations will not benefit from lower iron ore costs or discounted Russian coal. Hence, the cost structure will only benefit from the reduction in coking coal prices that too for 70-75% of requirement as India operations are captive on coking coal for the balance. We cut our FY23E consolidated EBITDA by 22%, driven by 34% reduction in standalone EBITDA, partially offset by 4% increase in TSE EBITDA. The reduction in domestic EBITDA is driven by: a) lower than expected sales volume, b) reduction in ASP and c) higher than estimated coking coal cost.

Outlook

We maintain our Neutral rating on Tata Steel with revised TP of INR 965 (vs INR 1,410 earlier) based on SoTP.

More Info

At 11:00 hrs Tata Steel was quoting at Rs 866.70, up Rs 5.50, or 0.64 percent.

It has touched an intraday high of Rs 882.00 and an intraday low of Rs 864.00.

It was trading with volumes of 213,404 shares, compared to its thirty day average of 562,270 shares, a decrease of -62.05 percent.

In the previous trading session, the share closed down 5.03 percent or Rs 45.65 at Rs 861.20.

The share touched its 52-week high Rs 1,534.60 and 52-week low Rs 843.00 on 16 August, 2021 and 20 June, 2022, respectively.

Currently, it is trading 43.52 percent below its 52-week high and 2.81 percent above its 52-week low.

For all recommendations report, click here

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