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Tata Steel reported EBITDA in line in the Indian business and surprised
positively in Europe (our estimate: negative EBITDA/t). Stable European
sales volume QoQ was also a positive against our estimate of 6% dip. The
2.9mtpa expansion in India is on track for completion by March 2012 and
is a key trigger for the company. However, the EBITDA loss in minor
subsidiaries was a negative. We maintain ‘BUY’ with TP of INR617/share.
Domestic EBITDA in line, international EBITDA surpasses estimate
Tata Steel reported consolidated EBITDA of INR27.5bn, surpassing our INR20.2bn
estimate. Standalone (Indian) business reported INR27.7bn EBITDA, exactly in line with
our estimate. International business posted EBITDA of INR3.7bn which after EBITDA
loss at minor subsidiaries of INR3.9bn gave a negative EBITDA of INR 0.2bn; but, this
was still above our expectation of negative EBITDA of INR7.5bn.
European business surprises with USD32/t EBITDA
European business sales volume of 3.5mt was better than our 3.3mt estimate. Q3FY12
guidance is 3.2‐3.3mt. The business posted EBITDA and EBITDA/t of USD 112mn and
USD32, respectively. For the international business, net EBITDA and EBITDA/t was
USD32m and USD8, respectively (after netting the above EBITDA loss), were better
than our expectations of negative EBITDA/t of USD 41 due to better volumes and
realisations.
EBITDA losses of USD70‐80 mn in minor subsidiaries
The company suffered EBITDA loss of USD70‐80mn in its minor JVs/subsidiaries,
including Tata Metalliks, Tata Steel Thailand and Tata Steel South Africa (Tata KZN). The
losses are expected to dip going ahead due to sale of Tata Metalliks unit and
discontinuation of one‐offs.
Outlook and valuations: Positive; maintain ‘BUY’
We believe going ahead European business EBITDA will be sub‐par due to weak
demand, but will benefit from declining raw material cost, reduced fixed cost and
improved product mix. The completion of 2.9mtpa high margin Indian expansion by
March 2012 is a key near‐term trigger for the company. We maintain our estimates
and our ‘BUY’ recommendation with a target price of INR617/share.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tata Steel reported EBITDA in line in the Indian business and surprised
positively in Europe (our estimate: negative EBITDA/t). Stable European
sales volume QoQ was also a positive against our estimate of 6% dip. The
2.9mtpa expansion in India is on track for completion by March 2012 and
is a key trigger for the company. However, the EBITDA loss in minor
subsidiaries was a negative. We maintain ‘BUY’ with TP of INR617/share.
Domestic EBITDA in line, international EBITDA surpasses estimate
Tata Steel reported consolidated EBITDA of INR27.5bn, surpassing our INR20.2bn
estimate. Standalone (Indian) business reported INR27.7bn EBITDA, exactly in line with
our estimate. International business posted EBITDA of INR3.7bn which after EBITDA
loss at minor subsidiaries of INR3.9bn gave a negative EBITDA of INR 0.2bn; but, this
was still above our expectation of negative EBITDA of INR7.5bn.
European business surprises with USD32/t EBITDA
European business sales volume of 3.5mt was better than our 3.3mt estimate. Q3FY12
guidance is 3.2‐3.3mt. The business posted EBITDA and EBITDA/t of USD 112mn and
USD32, respectively. For the international business, net EBITDA and EBITDA/t was
USD32m and USD8, respectively (after netting the above EBITDA loss), were better
than our expectations of negative EBITDA/t of USD 41 due to better volumes and
realisations.
EBITDA losses of USD70‐80 mn in minor subsidiaries
The company suffered EBITDA loss of USD70‐80mn in its minor JVs/subsidiaries,
including Tata Metalliks, Tata Steel Thailand and Tata Steel South Africa (Tata KZN). The
losses are expected to dip going ahead due to sale of Tata Metalliks unit and
discontinuation of one‐offs.
Outlook and valuations: Positive; maintain ‘BUY’
We believe going ahead European business EBITDA will be sub‐par due to weak
demand, but will benefit from declining raw material cost, reduced fixed cost and
improved product mix. The completion of 2.9mtpa high margin Indian expansion by
March 2012 is a key near‐term trigger for the company. We maintain our estimates
and our ‘BUY’ recommendation with a target price of INR617/share.
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