Tata Steel - Cost pressures pull margins down BUY :Emkay

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Tata Steel

Cost pressures pull margins down

BUY

CMP: Rs 430                                       Target Price: Rs 503

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n     Consolidated topline at Rs 328 bn, up 15% YoY and down 1% QoQ as the steel realizations (Rs 51727/ tonne) in INR term and volume remained flat QoQ

n     EBITDA at Rs 28 bn, down 25% YoY and 38% QoQ primarily due higher raw material costs. EBITDA/ tonne in Europe and India declined to US$30 and US$342 (Rs 16786) respectively

n     While the standalone APAT stood at Rs 15 bn, weaker performance at other subsidiaries and inter-company tax adjustments dragged the consol. APAT down to US$2.1 bn

n     Revising FY12 and FY13 EPS to Rs 70 and Rs 72 respectively; we cut our target price to Rs 503 valuing the company on SOTP basis. Maintain Buy