Kotak report on Tata Steel, Strategy:: PDF links

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Strategy
Strategy: Don't mind the gap
Don’t mind the gap. We are not perturbed by the government’s low-key approach to
fiscal, financial, governance and investment reforms. It may have different priorities and
timelines for reforms versus the market’s expectations. Thus, the government’s recent
policy announcements and actions appear anemic. Reforms may take longer than the
Street’s expectations but will be more sustainable. Investors may want to reconcile their
expectations on reforms with the government’s different priorities and schedule


Company alerts
Tata Steel: TSE annual report - high cash burn in Europe

TSE annual report – high cash burn in Europe. Our analysis of Tata Steel Europe’s

(TSE) FY2014 annual report highlights high cash burn of US$680 mn due to low 

profitability, high interest and capex spends. This led to increase in TSE’s net debt to 

US$6.1 bn in FY2014 from US$5.4 bn in FY2013. Despite improving outlook in Europe, 

TSE will remain a drag on Tata Steel’s cash flows; we estimate TSE will need to earn an 

EBITDA/ton of ~US$80 to be cash neutral—a tough ask over the next 2-3 years. We 

incorporate increased iron ore royalty rates and our economist’s revised Fx rate. We cut 

our target price to `505 from `525 earlier. Maintain REDUCE

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Link

http://www.kotaksecurities.com/pdf/indiadaily/indiadaily30092014so.pdf