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IDBI Capital Report
Tata Steel Ltd.'s Q1 FY24 profitability was below with our expectations. India sales volumes decreased by 7% QoQ at 4.8 million tonnes while Ebitda/tonne remained flattish QoQ to Rs 15,651.
However, Tata Steel's European operations profitability continued to remain weak, Ebitda remained negative for two consecutive quarters (Ebitda loss of Rs 7,890/tonne in Q1 FY24 and Rs 7,610/tonne in Q4 FY23) due to higher coking coal cost, lower realisation and inflationary pressure.
Consolidated net debt increased by Rs 36 billion QoQ to Rs 714 billion mainly due to capital expenditure of Rs 48 billion spent during the quarter.
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 118 (earlier Rs 110) and maintain our 'Hold' rating on the stock.
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