Tata Steel Q3 Results Review - Improvement In TSE On The Anvil: ICICI Securities

ICICI Securities Report

Tata Steel Ltd.'s Q3 FY24 performance was ahead of consensus estimates mainly due to lower cost at standalone operations. Key points:

1. Standalone Ebitda/tonne at Rs 16,905 was up 19% QoQ mainly on lower raw material cost;

2. Neelachal Ispat Nigam Ltd.'s turned around posting profit at Ebitda level;

3. loss at Tata Steel UK widened QoQ owing to continued sub-optimal level of operations;

4. net debt was broadly stable QoQ driven by good cash generation at India operations; and

5. capex plan at KPO-II is broadly on track. Going ahead, we expect the structural improvement at Tata Steel UK and production ramp up at TSN to drive performance.

Besides, the incremental volume from KPO-II is likely to drive earnings growth from H2FY25E, in our view.

We maintain 'Add' on Tata Steel stock with an unchanged target price of Rs 150 on 6.0 times FY26E Ebitda.

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