Tata Steel In ‘Good Position’ To Post Stronger Q2, Says CFO Koushik Chatterjee
Tata Steel Ltd. is in a “good position” for a stronger second quarter on account of a “globally bullish steel cycle and supply reforms”, according to Executive Director and Chief Financial Officer Koushik Chatterjee.
The steelmaker is expected to deliver higher European spreads — product prices minus costs — increased deliveries, and release of working capital for Indian operations in the quarter ending September, he told BloombergQuint in an interview.
Cost cuts, coupled with a continued price rise trajectory and better automotive contracts, too, would aid Tata Steel’s operational performance, Chatterjee said. He even expects the company to be very fundamentally different than its own self in terms of strength, agility, growth and value creation.
Tata Steel saw its quarterly consolidated profit rise 34.1% sequentially in the quarter ended June. That was aided by higher steel prices, a decline in finance costs and depreciation, and lower other operating expenses. Its revenue and operating income, too, increased over the preceding three months.
Shares of the company rose as much as 2.5% as of 12:20 p.m. on Monday. Of the 33 analysts tracking the stock, 28 have a ‘buy’ rating, four suggest a ‘hold’ and one recommends a ‘sell’, according to Bloomberg data. The average of the 12-month consensus price target implies an upside of 8.2%.
Watch the full interview with Koushik Chatterjee here:
Here are some of the key analyst takeaways...
Maintains ‘overweight’, hikes target price to Rs 1,810, a potential upside of 21%.
Indian business Ebitda/tonne to expand in Q2 against market fears of large contraction.
European profitability to improve sharply over FY22.
European spreads to improve as lower priced contracts roll off.
Reiterate ‘buy’; raises share price target from Rs 1,500 to Rs 2,000, a potential upside of 34%.
Tata Steel’s Q1 Ebitda rose 14% QoQ as higher steel prices fuelled better margins.
Company expects even better realisations in both India and Europe in Q2.
Expects margins to fall subsequently due to higher coking coal prices and assuming a moderation in steel prices.
Upgrades FY22-23E EPS by 14-27%.
Despite 127% calendar year-to-date rally, stock is at 1.5x FY23E price/book value vs past peaks of 2x.
Reiterates ‘buy’, raises share price target from Rs 1,750 to Rs 1,950, implying an upside of 30%.
Concerns largely allayed.
To catch up with peers on Europe profitability in the upcoming quarters.
More upside to record standalone margins.
After record standalone profitability in Q1, guidance indicates further upside.