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B o t t o m l i n e b o o s t e d b y o n e - o f f g a i n s … .
Tata Steel’s Q1FY12 consolidated numbers were better then our
expectations primarily on the back of higher realisations. Group deliveries
stood at 6.1 million tonnes (MT) (our estimate: 6.2 MT). Consolidated net
sales at | 33000.2 crore (up ~21% YoY) were better then our expectation
(our estimate: | 28892.9 crore). Higher than expected realisations led to the
good performance at the topline level (higher by ~2% QoQ for Indian
operations and ~11% for European operations). EBITDA for the quarter
came in at | 4422.9 crore flattish both QoQ and YoY (our estimate: | 3299.4
crore). Overall consolidated underlying EBITDA/tonne of the company
remained flat at ~$162/tonne. The reported net profit grew ~28% QoQ and
~192.9% YoY to | 5346.6 crore. The consolidated other income during the
quarter under review was significantly higher at | 3882.26 crore. The other
income included | 411.11 crore on account of profit on stake sale in Tata
Refractories, | 2,879.29 crore on disposal of Tata Steel Global Mineral
Holding’s investment in Riversdale Mining & cash settlement of | 597.71
crore relating to the arbitration with the Teesside Cast Products (TCP)
Consortium.
ƒ Operational performance
The performance of domestic operations in Q1FY12 was better then
our expectation. The company posted an underlying EBITDA/tonne of
| 19517/tonne (~ US$437/tonne) as against our estimate of ~ US$370
per tonne). Tata Steel Europe (TSE) also posted a strong performance
for Q1FY12. While the volume at 3.5 million tonnes (MT) was in line
with our estimate, the EBITDA/tonne for TSE improved in Q1FY12 to
~$78/tonne as against EBITDA/tonne of ~$53/tonne in Q4FY11 (our
estimate: $40/tonne).
V a l u a t i o n
At the CMP of | 468, the stock is discounting its FY13E EPS by 5.9x
and EV/EBITDA by 4.6x. We are positive on the company’s domestic
operations but on account of slower demand and high cost scenario
we have a cautious stance on European operations. We have valued
the Indian operations at 5.5x its FY13E EV/EBITDA and European and
Asian subsidiaries at 4x its FY13E EV/EBITDA. We have arrived at a
target price of | 506 and assigned a HOLD rating to the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
B o t t o m l i n e b o o s t e d b y o n e - o f f g a i n s … .
Tata Steel’s Q1FY12 consolidated numbers were better then our
expectations primarily on the back of higher realisations. Group deliveries
stood at 6.1 million tonnes (MT) (our estimate: 6.2 MT). Consolidated net
sales at | 33000.2 crore (up ~21% YoY) were better then our expectation
(our estimate: | 28892.9 crore). Higher than expected realisations led to the
good performance at the topline level (higher by ~2% QoQ for Indian
operations and ~11% for European operations). EBITDA for the quarter
came in at | 4422.9 crore flattish both QoQ and YoY (our estimate: | 3299.4
crore). Overall consolidated underlying EBITDA/tonne of the company
remained flat at ~$162/tonne. The reported net profit grew ~28% QoQ and
~192.9% YoY to | 5346.6 crore. The consolidated other income during the
quarter under review was significantly higher at | 3882.26 crore. The other
income included | 411.11 crore on account of profit on stake sale in Tata
Refractories, | 2,879.29 crore on disposal of Tata Steel Global Mineral
Holding’s investment in Riversdale Mining & cash settlement of | 597.71
crore relating to the arbitration with the Teesside Cast Products (TCP)
Consortium.
ƒ Operational performance
The performance of domestic operations in Q1FY12 was better then
our expectation. The company posted an underlying EBITDA/tonne of
| 19517/tonne (~ US$437/tonne) as against our estimate of ~ US$370
per tonne). Tata Steel Europe (TSE) also posted a strong performance
for Q1FY12. While the volume at 3.5 million tonnes (MT) was in line
with our estimate, the EBITDA/tonne for TSE improved in Q1FY12 to
~$78/tonne as against EBITDA/tonne of ~$53/tonne in Q4FY11 (our
estimate: $40/tonne).
V a l u a t i o n
At the CMP of | 468, the stock is discounting its FY13E EPS by 5.9x
and EV/EBITDA by 4.6x. We are positive on the company’s domestic
operations but on account of slower demand and high cost scenario
we have a cautious stance on European operations. We have valued
the Indian operations at 5.5x its FY13E EV/EBITDA and European and
Asian subsidiaries at 4x its FY13E EV/EBITDA. We have arrived at a
target price of | 506 and assigned a HOLD rating to the stock.
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