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Metals & Mining: Tata Steel (TISC.BO, Buy, on Conviction List)
• In our view, the current price does not reflect Tata Steel’s strong growth trajectory (46% FY10-FY13E EBITDA CAGR) and improving return
profile, driven by robust profitability at India operations (70% of FY11E EBITDA) and sustainable recovery at Tata Steel Europe. At current price
levels, the negatives, if any, are more than priced in, and the market is assigning unjustifiably low (negative) value to the European business
• On earnings-based multiples, the stock is trading at 4.3X FY12E EV/EBITDA, at 30% discount to mid-cycle of 6.2X and 24% discount to peers
Tata Steel: Compelling valuations
> The stock trades at 1.5X FY2012E P/B, in line with the sector avg despite sector leading FY12E ROE of 23% (sector ROE: 18%).
> On earnings-based multiples, the stock is trading at 4.3X FY12E EV/EBITDA, at 30% discount to mid-cycle of 6.2X and 24% discount to peers.
> Our 12-m target price of Rs761 is based on FY12E P/B
Tata Steel: Sustainable profitability
> Tata Steel’s strong growth trajectory (46% FY10-FY13E EBITDA CAGR) and improving return profile, driven by
robust profitability at India operations 70% of FY11E EBITDA) and sustainable recovery at Tata Steel Europe.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Metals & Mining: Tata Steel (TISC.BO, Buy, on Conviction List)
• In our view, the current price does not reflect Tata Steel’s strong growth trajectory (46% FY10-FY13E EBITDA CAGR) and improving return
profile, driven by robust profitability at India operations (70% of FY11E EBITDA) and sustainable recovery at Tata Steel Europe. At current price
levels, the negatives, if any, are more than priced in, and the market is assigning unjustifiably low (negative) value to the European business
• On earnings-based multiples, the stock is trading at 4.3X FY12E EV/EBITDA, at 30% discount to mid-cycle of 6.2X and 24% discount to peers
Tata Steel: Compelling valuations
> The stock trades at 1.5X FY2012E P/B, in line with the sector avg despite sector leading FY12E ROE of 23% (sector ROE: 18%).
> On earnings-based multiples, the stock is trading at 4.3X FY12E EV/EBITDA, at 30% discount to mid-cycle of 6.2X and 24% discount to peers.
> Our 12-m target price of Rs761 is based on FY12E P/B
Tata Steel: Sustainable profitability
> Tata Steel’s strong growth trajectory (46% FY10-FY13E EBITDA CAGR) and improving return profile, driven by
robust profitability at India operations 70% of FY11E EBITDA) and sustainable recovery at Tata Steel Europe.
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