reports
- Ashish Kejriwal
Tata Steel's Q3FY20 results (Outperformer) - A one off weak quarter
Q3FY20 result Highlights- Lower steel prices depresses earnings Tata Steel reported very weak profitability with consol adj EBITDA of Rs26.4bn, down 34% qoq Adj. of one-time provision reversal, EBITDA stood at Rs21.7bn (IDFCe: Rs33.2bn). The miss was due to higher than expected losses in Europe business and higher inventory losses in India. Tata Steel Standalone (TSI) reported adj EBITDA of Rs34.7bn, up 4% qoq. However, adj of reversal of provision of Rs4.74bn in other expenses, EBITDA stood...
- Ashish Kejriwal
Company update: Tata Steel (Outperformer) - Awaiting demand recovery
The last six months have seen BSE metals index slide 25% amid global trade war uncertainty and companies’ slipping profitability. Tata Steel (TATA) is no exception, given its leveraged balance sheet (down 36%). Though the balance sheet does not raise alarm on the possibility of a default, it does restrict equity value. We believe Q2 earnings will be the bottom for Tata on our base case of the economy bottoming out in the domestic market. We estimate 19% yoy rise in FY21E EBITDA, post 25% yoy fal...
- Ashish Kejriwal
Tata Steel's Q1FY20 results (Outperformer) - Near term weakness; hope ...
Q1FY20 result Highlights- Higher steel prices supports earnings Tata Steel reported in line adj EBITDA of Rs55.3bn, down 29% qoq. Tata Steel Standalone (TSI) reported better-than-expected adj EBITDA of Rs42.8bn (IDFCe: Rs40.1bn) due to higher realisation. Adj EBITDA was down 12% qoq due to lower volumes (3.01mt, down 16% qoq) offset by higher realisation (up ~2% qoq). Adj EBITDA/t stood at Rs14,209, up 4% qoq. Tata Steel Europe (TSE) could just break-even at EBITDA level with adj EBITDA of ...
- Ashish Kejriwal
Event update: Tata Steel (Outperformer) - Europe JV deal called off: s...
Event Tata Steel (TATA IN) informs that the proposed JV of their European steel business with Thyssenkrupp (TKA GR) will not go ahead due to the European commission (EC)’s continuing concerns. Details TATA and TKA have offered to divest few of their assets to address EC’s concerns on competitive intensity in Europe. However, the market survey did not resolve the EC's concerns and it asked for further divestment of some of the key assets of the companies. It seems that the roadblock was due to...
- Ashish Kejriwal
Tata Steel's Q4FY19 results (Outperformer) - Deleveraging on; Europe J...
Q4FY19 result Highlights- Higher volume, lower CoP offset price fall Tata Steel reported better-than-expected adj EBITDA of Rs73.1bn, up 1% qoq (6% higher than IDFCe). The entire beat was from European operation which inturn was due to lower CoP. Tata Steel India (TSI) reported marginally lower-than-expected adj EBITDA of Rs48.75bn (IDFCe: Rs50.3bn after Tata Steel BSL numbers), flat qoq despite sharp decline in steel prices (down ~Rs3,500/t qoq). Higher volumes (up 20.5% qoq to 3.58mt) due...
- Ashish Kejriwal
Tata Steel's Q3FY19 results (Outperformer) - Domestic focus to pay-off
Q3FY19 result Highlights- Lower volume, realisation drag EBITDA Tata Steel reported in-line consol adj EBITDA of Rs72.3bn, down 18% qoq. Tata Steel India reported in-line adj EBITDA (adj of forex impact of ~Rs3.1b) of Rs48.7bn (IDFCe: Rs48.3bn), down 17% qoq due to lower volumes (down 6.7% qoq to 2.97mt), lower realisations (down Rs700/t qoq) and higher raw material costs. Volumes were lower due to destocking at consumers’ end and liquidity issues in the market. Reported EBITDA of Rs45.5b in...
- Ashish Kejriwal
Management Speak: Tata Steel (Outperformer) - No more leveraging on th...
We come back positive post our meeting with Tata Steel’s (Tata) top management, at its investor meet, on the following counts: (1) focus on India growth, (2) priority on deleveraging, which points to likely cessation of large-funded acquisitions, (3) smooth integration of recently-acquired Bhushan Steel, and (4) on track formation of JV of Tata Steel Europe (TSE) with ThyssenKrupp. We maintain our Outperformer rating on the stock with a target price of Rs778. We present key takeaways from the me...
- Ashish Kejriwal
Tata Steel's Q2FY19 results (Outperformer) - Improved earnings; no fur...
Q2FY19 result Highlights- Indian operation shines while Europe falters Tata Steel reported higher-than-expected consol EBITDA of Rs89.2bn, up 37.9% qoq. However, approx Rs11.8bn was non-operational (~Rs5.8bn forex gain including Rs2.54bn in standalone and ~Rs6bn asset monetisation benefits in Europe). Adjusted for the same, consol EBITDA stood at Rs77.4bn (IDFCe: Rs70.1bn) Tata Steel India exceeded our expectations and reported EBITDA of Rs59.9bn (IDFCe: Rs51.6bn), up 18% qoq due to higher v...
MOSL: TATA STEEL (Neutral)-Earnings largely aided by one-offs-Margins ...
Tata Steel: Earnings largely aided by one-offs; Margins at peak; Maintain Neutral (TATA IN, Mkt Cap USD9.3b, CMP INR589, TP INR644, 9% Upside, Neutral) Tata Steel’s (TATA) 2QFY19 consol. EBITDA increased 38% QoQ to INR89b, largely aided by one-offs (forex gains of INR9.7b and other gains of INR12.6b). Finance cost shot up 29% QoQ (+59% YoY) to INR21b due to the full impact of acquisition debt. Net debt (incl. perpetual bonds) remained stable QoQ at ~INR1,065b. FCF was offset by forex loss ...
- Ashish Kejriwal
Tata Steel's Q1FY19 results (Outperformer) - High steel prices support...
Q1FY19 result Highlights- TSI in line while TSE shines Tata Steel’s India operation performance was in-line with expectations but Tata Steel Europe’s performance was above estimates. Consol EBITDA of Rs64.7bn (IDFCe: Rs65.9bn), down 0.5% qoq, was adversely affected by ~Rs5.0bn unrealised forex losses which will remain amid appreciating US$. The operational entity’s EBITDA stood at Rs72.3bn, up 12% qoq Tata Steel India (TSI) reported EBITDA of Rs 50.7bn, up 5.5% qoq, and EBITDA/t of Rs17,077,...
MOSL: TATA STEEL (Neutral)-Strong operating performance, yet PAT decli...
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...
- Warut Promboon
Tata Steel: Debt Beneath the Wings
We initiate our coverage on Tata Steel Ltd (TATA IN) (“TSL”) with an UNDERWEIGHT recommendation on all of the TATAIN complex as we believe the complex is fully-valued against its domestic peers (See the Valuation section). We also expect the company’s leverage to increase materially (see the debt section). Among India’s steel producers, we see a better value proposition in the JSTLIN complex (JSW Steel) and expect TATAIN yield to increase in the near term on debt overhang (though we do not expe...
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