Most analysts maintained their ‘buy' ratings on Tata Steel Ltd. as it met estimates in the quarter ended June, though the Europe business lagged.
The steelmaker saw its net profit and revenue rise sequentially in the April-June period, driven by higher prices of hot-rolled coil steel. Its operating income, too, increased over the preceding three months, defying a rise in raw material cost and higher employee expenses.
While the analysts stayed upbeat, CLSA highlighted a build up in working capital that partly impacted deleveraging.
Shares of Tata Steel were trading 0.5% lower as of 11 a.m. on Friday compared with a 0.56% gain in the Nifty 50. The stock had risen as much as 1.5% and fallen as much as 3.1% in morning trade. Of the 33 analysts tracking the company, 28 have a ‘buy' rating, four suggest a ‘hold' and one recommends a ‘sell', according to Bloomberg data. The average of the 12-month consensus price target implies an upside of 0.3%.
Here's what analysts have to say about Tata Steel's Q1 FY22 results:
CLSA
Maintains ‘buy', with a target price at Rs 1,435 apiece.
Tata Steel's domestic business better than expected; Europe lags.
Standalone profitability continues to surprise.
Deleveraging partly impacted by working capital build up.
Outlook for domestic steel prices, European profitability and working capital reduction to be the key.
Investec Securities
Maintains ‘buy', with a target price of Rs 1,850 apiece.
Tata Steel shines at consolidated level.
Superior Tata Steel India, BSL performance offsets Europe and long products.
Aggressive carbon provisioning may have resulted into lower spreads at Tata Steel.
Highlights Tata as preferred ferrous proxy.
JPMorgan
Maintains ‘overweight' rating, hikes target price to Rs 1,810 from Rs 1,610 apiece.
Highest ever Ebitda and PAT in a quarter; volumes impacted from second wave.
Tata's margin hit in Q2 to be lowest within Indian steel given contract pricing.
Estimates imply a 45% decline in spot Ebitda/ tonne in FY23.
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