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IDBI Capital Report
Tata Steel Ltd.'s Q3 FY24 Ebitda was ahead of our and street forecast as India operations reported stronger than expected margins. India sales volumes increased by only 3% QoQ at 4.88 million tonnes; nevertheless, Ebitda/tonne jumped 25% QoQ to Rs 16,903.
However, European operations profitability continued to remain weak and it remains Tata Steel's biggest concerns. UK reported Ebitda loss of Rs 26,063/tonne in Q3 FY24 versus loss of Rs 18,802/tonne in Q2 FY24 as demand remained weak in Europe.
Tata Steel is now undertaking restructuring of the UK business to transition it to being economically and environmentally sustainable. Broadly, we maintain our FY24-25 estimates and introduce FY26 forecasts in this report.
We revise our SOTP-based target price to Rs 138 (earlier Rs 110) and maintain our 'Hold' rating on the stock.
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