Tata Steel share price rose in early trade on May 4 a day after the company came out with its March quarter earnings.
Tata Steel on May 3 reported a consolidated net profit of Rs 9,835.12 crore, a 37.3 percent growth over a year ago.
The firm also announced a stock split of 10:1. India’s largest steelmaker reported 39 percent year-on-year (YoY) growth in consolidated revenue at Rs 69,323.50 crore, with Tata Steel India showing 34 percent growth at Rs 36,681 crore and Tata Steel Europe clocking 53 percent growth at Rs 26,389 crore.
At the operating level, earnings before interest, tax, depreciation, and amortisation (EBITDA) increased six percent to Rs 15,174 crore with EBITDA per tonne rising 3.7 percent to Rs 18,937 from the corresponding period last fiscal, said Tata Steel in its BSE filing.
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Here is what brokerages have to say about the stock and company after earnings:
The foreign research house has kept an overweight rating and raised the target price to Rs 1,940 per share.
“It was another year of earnings upgrades given strong Europe and India show with Europe EBITDA per tonne at $241 and capex guidance muted,” it said.
JPMorgan increased FY23 earnings per share estimate by 24 percent, CNBC-TV18 reported.
The brokerage has maintained a hold rating on the stock with a target at Rs 1,240.
EBITDA fell five percent while adjusted EBITDA was flat sequentially.
EBITDA miss was driven by weak performance of non-TSE subsidiaries, CNBC-TV18 reported.
“The European business has surprised us positively and it could report a strong EBITDA for the next one to two quarters as well,” the brokerage said.
“However, with China’s economy slowing down, we expect steel prices to come under pressure. Further, India will be entering into a monsoon season in the next two months, which will cap any further price hikes from the current level (that is anyways close to an all-time high),” it added.
The strong FCF (free cash flow) supports downside while peak steel prices and coking coal prices cap any further margin expansion from current levels.
“We maintain our neutral rating with SoTP-based (sum of the parts) target price of Rs 1,500,” the brokerage said.
At 09:20 hrs Tata Steel was quoting at Rs 1,298.20, up Rs 3.10, or 0.24 percent on the BSE.
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