Motilal Oswal - Tata Steel (E1TATASTLPP) MOSL: TATA STEEL (Neutral)-Strong operating performance, yet PAT declines on MA

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Motilal Oswal

MOSL: TATA STEEL (Neutral)-Strong operating performance, yet PAT declines on M&A

Tata Steel: Strong operating performance, yet PAT declines on M&A; Focus still on gaining market share rather than shareholder value

(TATA IN, Mkt Cap USD9.3b, CMP INR569, TP INR632, 11% Upside, Neutral)

Tata Steel's (TATA) 1QFY19 consol. EBITDA came in flat QoQ at INR65b, broadly in line with our estimate. Standalone (S/A) EBITDA increased 5% QoQ to INR50.8b (INR17,077 per ton), despite a 2% decline in sales due to restocking of supply chain. TSE (Europe) EBITDA grew strongly by 44% QoQ to INR16.7b (USD105/t), despite a 4% decline in sales tonnage. Bhushan Steel's underlying EBITDA stood at ~INR8b for the quarter, but it contributed only INR660m to TATA's EBITDA due to acquisition-related fair value accounting impact and consolidation w.e.f. 18th May 2018. Other subsidiaries together contributed INR6.5b loss due to the forex translation impact in the raw material supply chain entities. Adj. PAT declined 30% QoQ to INR23b due to higher interest and depreciation on partial consolidation of Bhushan Steel.

Net debt (incl. perpetual bonds) increased by INR345b QoQ to INR1.06t on account of acquisition of Bhushan Steel, working capital increase of INR29b, a forex loss of INR11b, and capex of INR19b.

14/08/2018 8 EN

Underlying

Tata Steel

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IN9081A01010 National Stock Exchange of India India

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Motilal Oswal

Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.

Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.

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MOSL: TATA STEEL (Neutral)-Strong operating performance, yet PAT declines on M&A

Tata Steel's Q3FY20 results (Outperformer) - A one off weak quarter

Company update: Tata Steel (Outperformer) - Awaiting demand recovery

Tata Steel's Q1FY20 results (Outperformer) - Near term weakness; hope hinges on demand revival in H2

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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