February 08, 2017 / 15:09 IST
Tata Steel’s (TATA) 3QFY17 consolidated EBITDA increased 19% QoQ to INR 35.4b, but missed our estimate due to disappointing performance at TSE (Europe). TSI (India) reported strong 76% QoQ growth in EBITDA (INR 34b v/s est. INR 28.4b) on delayed impact of coking coal cost and decline in power/fuel cost. Adj. PAT of INR 2b was an improvement over loss of INR 1.1b in 2QFY17.
OutlookWe are raising consolidated EBITDA by 10% to INR 143b in FY17E and by 5% to INR 169b in FY18E on upgrades in TSI. Net debt has increased to INR790b (incl. Hybrid) on INR 50b increase in working capital during 9MFY17 driven by KPO and a rise in prices of steel and RMs. We are raising target price by 23% to INR 401 based on SOTP, and maintain Sell.
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