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Tata Steel's 2.9mn tonne brownfield expansion programme is on track and expected
to be commissioned by FY2012. The product mix constitutes 2.5mn tonne of HRC
and 0.3mn tonnes of slabs. We expect this expansion to contribute ~`3,500cr p.a.
to its consolidated EBITDA once the production reaches high levels of utilization.
Tata Steel is in the process of developing a coking coal mine in Mozambique and
an iron ore mine in Canada to enhance integration levels of TSE. The projects are
expected to be commissioned in phases beginning FY2012. Total capex remaining
for the Mozambique project is US$100mn-150mn, while the Canadian project will
involve capex of CAD350mn. We expect these backward integration projects at
Mozambique and Canada to boost TSE's earnings substantially post FY2012.
Tata Steel is setting up a 6mn tonne integrated steel plant (including cold rolling
mill) in two phases of 3mn tonnes each for a capex of `34,500cr. Phase 1 of the
3mn tonne plant is expected to be completed by CY2014. This plant could potentially
result in significant earnings accretion post completion, as these plants will be
backed by captive iron ore.
Tata Steel is currently trading at an EV/EBITDA of 5.9x FY2012E and 4.5x FY2013E,
which is inexpensive in our view. On a P/B basis, the stock is trading at 0.9x FY2012E
and 0.7x FY2013E P/BV. We maintain our Buy recommendation on the stock with
a target price of `510.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tata Steel's 2.9mn tonne brownfield expansion programme is on track and expected
to be commissioned by FY2012. The product mix constitutes 2.5mn tonne of HRC
and 0.3mn tonnes of slabs. We expect this expansion to contribute ~`3,500cr p.a.
to its consolidated EBITDA once the production reaches high levels of utilization.
Tata Steel is in the process of developing a coking coal mine in Mozambique and
an iron ore mine in Canada to enhance integration levels of TSE. The projects are
expected to be commissioned in phases beginning FY2012. Total capex remaining
for the Mozambique project is US$100mn-150mn, while the Canadian project will
involve capex of CAD350mn. We expect these backward integration projects at
Mozambique and Canada to boost TSE's earnings substantially post FY2012.
Tata Steel is setting up a 6mn tonne integrated steel plant (including cold rolling
mill) in two phases of 3mn tonnes each for a capex of `34,500cr. Phase 1 of the
3mn tonne plant is expected to be completed by CY2014. This plant could potentially
result in significant earnings accretion post completion, as these plants will be
backed by captive iron ore.
Tata Steel is currently trading at an EV/EBITDA of 5.9x FY2012E and 4.5x FY2013E,
which is inexpensive in our view. On a P/B basis, the stock is trading at 0.9x FY2012E
and 0.7x FY2013E P/BV. We maintain our Buy recommendation on the stock with
a target price of `510.
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