Tata Steel will remain in focus today after the company on October 31 reported an 87 percent on-year decline in consolidated net profit at Rs 1,514 crore for the September quarter. Tata Steel’s profit declined 80 percent sequentially.
Consolidated revenue remained flat with a marginal decline of 1 percent year-on-year to Rs 59,878 crore. It was down 6 percent on-quarter.
Here is what brokerages have to say about the stock and the company after the September quarter earnings:
We have downgraded the stock to ‘sell’ and cut the target price to Rs 90 from Rs 110 per share.
The Q2 was below estimates as a weak India offset strong Europe. CLSA expects the Indian margin to improve but see meaningful downside to European profitability and also see downside risks to Indian steel prices as they are at 12-16 percent premiums to import parity.
The broking house cut the FY23-25 EBITDA estimate by 18-25 percent on lower profitability (largely in Europe), reported CNBC-TV18
The stock is currently trading at 4.8x FY23 EV/EBITDA and 1x P/B. We believe the stock is fully valued given the current steel prices outlook globally.
We do not expect any sharp increase in steel prices in the near term while increase in coking coal prices remain a concern for the margins in 4QFY23.
We maintain our ‘neutral’ rating on Tata Steel with an SoTP-based Target Price of Rs 91.