Tata Steel Q1 Results Review - Softness In Indian Operations; Improvement Visible In Europe: IDBI Capital

IDBI Capital Report

Tata Steel Ltd.’s Q1 FY25 revenue and Ebitda were in line with our expectations. Consolidated sales decreased by 8% QoQ to Rs 547 billion due to subdued steel demand across most regions. Consolidated sales volume decreased by 7% QoQ to 7.39 million tonnes.

Nevertheless, consolidated Ebitda/tonne increased by 10% QoQ to Rs 9,059. UK reported Ebitda loss of Rs 14,076/tonne in Q1 FY25 versus loss of 5,614/tonne in Q4 FY24, following the closure of BF-5.

Additionally, Netherlands operations turned Ebitda positive to Rs 3,075/tonne in Q1 FY25 versus loss of Rs 2,063/tonne in Q4 FY24, driven by improvement in input cost.

Tata Steel re-iterated volume growth guidance of 1.4 million tonne in FY25. We have reduced our FY25/FY26 EPS estimate by 27%/15%, respectively. We value stock based on FY26E EV/Ebitda multiple of 6.5 times, arriving at target price of Rs 164 and maintain our Hold rating on the stock.

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