India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Expansion to drive growth…
�� Has scale and global reach
• Along with being the 10th largest steel company in the world, Tata
Steel is also the 2nd most geographically diversified steel producer
having global presence in 50 markets.
• The domestic operations are self-sufficient in iron ore requirement
and ~60% self sufficient for its coking coal requirement. Raw
material integration for the domestic operations gives the
company a sustainable advantage to the company over its peers.
• In terms of user industry Tata Steel’s Indian operations caters to
automobiles, construction, industries etc. Tata Steel Europe
supplies steel to the construction, automotive, packaging segment
while NatSteel Holdings & Tata Steel Thailand caters primarily to
the construction industry.
�� Going ahead
• On the back of healthy demand growth in India, Tata Steel is
increasing the domestic capacity by 2.9 Mtpa (Million tonnes per
annum) which is expected to be operational by end of Q3FY12.
Furthermore the overall product mix is expected to improve with
the commencement of additional capacity. The access to captive
raw materials is expected to keep costs in check.
• So as to improve the competency of European operations the
company is planning to under take investment of £400 million
over the next five years to improve energy efficiencies & invest in
premium products giving access to new markets.
• In order to ensure raw material security for its global operations,
Tata steel has formed joint ventures in Australia, Mozambique,
etc. Over the long term this initiative is expected to augment
group’s overall raw material integration.
Valuation
Tata Steel’s Indian operations has a robust business model, higher margin
& domestic demand advantage. The upcoming new capacity is expected
to add to revenue & profitability along with increasing the contribution
from higher margin domestic business. The group’s strategy to
restructure long products business of European operations & target high
value markets is expected to yield benefits in long run. Going forward this
would help the company to have flexibility in its operations so as to focus
on segments having higher growth rate & keep the costs under check.
No comments:
Post a Comment