Tata Steel Shares End Lower After Volatile Session Despite Q1 Beat

Shares of Tata Steel Ltd. ended Tuesday with losses after a volatile session even as the company beat analysts' estimates in the first quarter, aided by its performance in Europe.

Tata Steel Q1 FY23 (Consolidated, YoY)

• Revenue up 19% at Rs 63,430.07 crore (Bloomberg estimate: Rs 60,474.2 crore)

• Ebitda down 7% at Rs 14,972.80 crore (Bloomberg estimate: Rs 12,478 crore)

• Ebitda margin at 23.6% vs 30.1% (Bloomberg estimate: 21%)

• Net profit down 13% at Rs 7,764.96 crore (Bloomberg estimate: Rs 7,275 crore)

"Our European business delivered a sharp improvement in performance as long-term contracts and product mix helped drive a strong increase in realisations," TV Narendran, managing director and chief executive officer at Tata Steel, said in an earnings statement after market hours on Monday.

Shares of the steelmaker swung between 1.67% gains and 1.5% losses intraday on Tuesday before falling 1.2%, at the close.

Of the 34 analysts tracking the company, 24 maintain a 'buy', four suggest a 'hold' and six recommend a 'sell', according to Bloomberg data. The 12-month consensus price target implies an upside of 32.5%.

Here's what analysts have to say about Tata Steel's Q1 FY23 results:

Jefferies

• Maintains 'hold' with a target price at Rs 830 apiece.

• Strong performance in Tata Steel Europe aided by long-term contracts and favourable product mix.

Motilal Oswal

• Maintains 'neutral' with a target price of Rs 975 apiece.

• Q1 numbers were an 'all-round beat'.

• Strong tailwind of contractual prices aided Tata Steel Europe.

ICICI Securities

• Reiterates 'reduce' at a target price of Rs 827, an implied return of 13.31%.

• Strong Ebitda in Tata Steel Europe, support from contract realisations and favourable raw material movement aided the strong earnings.

• Higher thermal coal prices and provisions on coking coal and iron ore weighed on Tata Steel long production.

• Aims to wait for Ebitda contraction cycle to play out.

• Expects downcycle to not last over four-five quarters with the peak at Q1 FY23.

• Focus on product mix aided the performance, while supply-chain disruptions, elevated inflation led to demand moderation.