Tata Steel Q4 Results Review - Healthy India Operations; Encouraging Signs In Europe: IDBI Capital

IDBI Capital Report

Tata Steel Ltd. Q4 FY24 Ebitda was ahead of our and street forecast as India operations reported stronger than expected margins. India sales volumes increased by 11% QoQ at 5.42 million tonnes; nevertheless, Ebitda/tonne dropped 10.8% QoQ to Rs 15,080.

However, European operations profitability continued to remain weak but losses declined in Q4 FY24. U.K reported Ebitda loss of Rs 5,614/tonne in Q4 FY24 versus loss of Rs 26,063/tonne in Q3 FY24 on carbon credit of GBP51 million.

Also, Netherlands operations reduced its Ebitda loss to Rs 2,063/tonne in Q4 FY24 versus loss of Rs 9,370/tonne in Q3 FY24. Tata Steel expects Netherland operations to turn Ebitda positive from Q1 FY25 onwards, while UK operation to break even in Q3 FY25 onwards.

We cut FY25 earning per share estimate by 6% and increase FY26 earning per share forecast by 5%. We revise our SOTP-based target price to Rs 143 (earlier Rs 138) and maintain our 'Hold' rating on the stock.

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