IGI Logo

Neutral Tata Steel Ltd For Target Rs.891

EBITDA up 58% QoQ on strong realization growth

* Tata Steel BSL (TSBSL), a subsidiary of Tata Steel, reported record high revenue/EBITDA/PAT of INR73.2b/INR25.7b/INR19b, up 24%/58%/111% QoQ and up 13%/25%/42% v/s our estimate. The beat on EBITDA was driven by higher-than-expected volumes and realization.

* Sales volumes rose 4% QoQ to 1.19mt and was 8% higher than our estimate.

* Realization increased by INR10,182/t (20%) QoQ to INR61,367/t. The same was higher by INR2,727/t (~5%) v/s our estimate due to better product mix and higher other operating income (up INR1,300/t QoQ).

* As a result, EBITDA/t stood at INR21,510/t, up 52% QoQ and 15% higher than our estimate (INR18,678).

* OCF/FCF stood at INR81.4b/INR80b in FY21 v/s INR17.1b/INR11b in FY20.

* During FY21, TSBSL repaid a debt of INR61.4b. As a result, its net debt stood ~INR100b at the end of FY21.

Tata Steel Long Products (TSLP), a subsidiary of TATA, also reported its 4Q and FY21 results. Below are the key highlights:

* 4QFY21 revenue/EBITDA/PAT rose 13%/21%/12% QoQ (-3%/15%/-28% v/s our estimate) to INR15.5b/INR5b/INR3.4b.

* Sponge iron/steel sales rose ~4% QoQ each to 171kt/172kt.

* Blended realization/t rose ~9% QoQ to INR45,094. However, the same was 4% lower than our estimate.

* EBITDA/t rose ~17% QoQ to INR14,514/t and was ~16% lower than our estimate.

* OCF/FCF stood at INR16.9b/INR16.5b in FY21 v/s -INR3.3b/-INR3.8b in FY20.

* During FY21, the company repaid INR13.2b in debt. As a result, its net debt stood at INR10.2b v/s INR26b at the end of FY20.

* Maintain Neutral: We value TATA’s India/Europe operations on a SoTP basis at FY22E EV/EBITDA of 6x/5x. We arrive at our TP of INR891/share. Maintain Neutral.

To Read Complete Report & Disclaimer Click Here

For More Motilal Oswal Securities Ltd Disclaimer http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html SEBI Registration number is INH000000412

Above views are of the author and not of the website kindly read disclaimer