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IDBI Capital Report
Tata Steel Ltd.'s Q2 FY24 profitability was below with our expectations. India sales volumes remained flat QoQ at 4.82 million tonnes as Ebitda/tonne decreased by 16% QoQ to Rs 13,242.
Further, European operations profitability continued to remain weak. UK reported Ebitda loss of Rs 18,806/tonne in Q2 FY24 versus loss of Rs 5,331/tonne in Q1 FY24 and Netherlands reported Ebitda loss of Rs 9,296/tonne in Q2 FY24 compared to loss of Rs 8,574/tonne in Q1 FY24 as demand remained weak in Europe.
Tata Steel took an impairment charge of Rs 126 billion in its standalone entity towards potential impact of decarbonisation and restructuring in Europe.
We cut our FY24 Ebitda estimate by 8% while we make minor changes to our FY25 forecasts.
We revise our SOTP-based target price to Rs 110 (earlier Rs 118) and maintain our 'Hold' rating on the stock.
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