Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Key Takeaways
Indian operations: Projects and volume growth are on track
Tata Steel's (TATA) ongoing capacity expansion at Jamshedpur from 6.8mtpa to 10mtpa
is on track and expected to be commissioned by 4QFY12. The company expects ~1.5mt
of incremental production in FY13. Crude steel production is expected to range 7.5-8m
tons in FY12.
Indian operations: Margins outlook remains robust
Margins in the Indian business are expected to remain steady despite sluggish steel
market in recent months. The regional premium over international flat steel product
prices is likely to bounce back in India because the actual supply growth will be less than
capacity addition due to shortage of iron ore in South India post mining ban in Bellary.
Europe: uncertain outlook for few quarters only
Tata Steel Europe (TSE) is on track to improve its operating parameters through
restructuring of long product business, modernizing facilities and improving product
efficiencies over the next two years. Ongoing restructuring at its long product division is
expected to help the company to cut its fixed costs and overheads. It will reduce its staff
strength by ~1,500 employees and ramp down its 1mtpa blast furnace.
TSE plans to improve its performance at Port Talbot by a rebuilding blast furnace and
reducing electricity costs due to availability of waste gases. TSE is trying to keep building
up carbon credits for FY13 by keeping FY12 production at 14m-14.5mt as demand is
expected to be subdued over the next two quarters for seasonal reasons.
Steel prices are expected to bottom now because finished steel stocks in Europe are
low, while import pressure is easing. Average steel realization for 2QFY12 is expected
to remain flattish with a negative bias as steel prices were weaker, which may put
pressure on margins. Though the margin outlook for next 2 quarters is uncertain due to
timing difference between costs and sales prices from accounting point of view, the
cash margins are likely to be less volatile because TSE is essentially in conversion
business.
Valuation and view
Capex guidance remains unchanged at USD2.3b-2.5b for the group. We expect strong
earnings growth due to volume growth in high margin Indian business though there are
uncertainties in the near term. Maintain Buy.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Key Takeaways
Indian operations: Projects and volume growth are on track
Tata Steel's (TATA) ongoing capacity expansion at Jamshedpur from 6.8mtpa to 10mtpa
is on track and expected to be commissioned by 4QFY12. The company expects ~1.5mt
of incremental production in FY13. Crude steel production is expected to range 7.5-8m
tons in FY12.
Indian operations: Margins outlook remains robust
Margins in the Indian business are expected to remain steady despite sluggish steel
market in recent months. The regional premium over international flat steel product
prices is likely to bounce back in India because the actual supply growth will be less than
capacity addition due to shortage of iron ore in South India post mining ban in Bellary.
Europe: uncertain outlook for few quarters only
Tata Steel Europe (TSE) is on track to improve its operating parameters through
restructuring of long product business, modernizing facilities and improving product
efficiencies over the next two years. Ongoing restructuring at its long product division is
expected to help the company to cut its fixed costs and overheads. It will reduce its staff
strength by ~1,500 employees and ramp down its 1mtpa blast furnace.
TSE plans to improve its performance at Port Talbot by a rebuilding blast furnace and
reducing electricity costs due to availability of waste gases. TSE is trying to keep building
up carbon credits for FY13 by keeping FY12 production at 14m-14.5mt as demand is
expected to be subdued over the next two quarters for seasonal reasons.
Steel prices are expected to bottom now because finished steel stocks in Europe are
low, while import pressure is easing. Average steel realization for 2QFY12 is expected
to remain flattish with a negative bias as steel prices were weaker, which may put
pressure on margins. Though the margin outlook for next 2 quarters is uncertain due to
timing difference between costs and sales prices from accounting point of view, the
cash margins are likely to be less volatile because TSE is essentially in conversion
business.
Valuation and view
Capex guidance remains unchanged at USD2.3b-2.5b for the group. We expect strong
earnings growth due to volume growth in high margin Indian business though there are
uncertainties in the near term. Maintain Buy.
No comments:
Post a Comment