ICICI Securities has given a buy rating to Tata Steel with a target price of Rs 510. The share price moved up by 0.13 per cent from its previous close of Rs 424.95. The stock’s last traded price is Rs 425.50.
Tata Steel Ltd., incorporated in the year 1907, is a Large Cap company (having a market cap of Rs 51103.15 Crore) operating in Metals – Ferrous sector.
Tata Steel Ltd. key Products/Revenue Segments include Steel & Steel Products which contributed Rs 67213.85 Crore to Sales Value (95.18 % of Total Sales), Power which contributed Rs 1709.51 Crore to Sales Value (2.42 % of Total Sales) and Other Operating Revenue which contributed Rs 1687.56 Crore to Sales Value (2.38 % of Total Sales)for the year ending 31-Mar-2019.
Financials
For the quarter ended 30-06-2020, the company reported a Consolidated sales of Rs 24288.51 Crore, down 28.08 % from last quarter Sales of Rs 33769.95 Crore and down -31.35 % from last year same quarter Sales of Rs 35382.16 Crore Company has reported net profit after tax of Rs -4663.13 Crore in latest quarter.
Investment Rationale
The brokerage has increased FY21E realisations in keeping with the price increases witnessed in India over the past month. This makes FY21E EBITDA/te (standalone) higher than that in FY22E. It has moderated the target price to Rs510/share from Rs594/share earlier. It values the company on 0.8x P/B FY22E, assuming through-cycle RoE of ~10%. The movement of Tata Steel Europe out of the fold again got postponed (as per news articles), hence it doesn’t appear that the company can sustainably achieve 12-13% RoE mark in this cycle.
Promoter/FII Holdings
Promoters held 34.4 per cent stake in the company as of June 30, 2020, while FIIs held 11.8 per cent, DIIs 30 per cent and public and others 23.7 per cent.