Angel Broking maintain 'Buy' on Tata Steel
Bangalore: Angel Broking has recommended 'Buy' on Tata Steel with a price target of 
702 as against the market price of 606.3. Tata Steel's net revenue saw and increase by 25 percent year on year and 8.8 percent quarter on quarter to 70.38 billion on account of higher sales volume, improving product mix and higher realizations.
Capacity utilization in Europe stood at 87 percent as compared to 90 percent in 1QFY11. In Europe, deliveries were down by 9.5 percent year on year and 4.9 percent quarter on quarter to 3.5Million tones, as the quarter is seasonally weak. Group deliveries were down by 5.9 percent year on year to 6 million tonnes and flat quarter on quarter. EBITDA/tonne for TSE declined to $56 as compared to $79 in 1QFY11, as raw-material cost/tonne increased by 20 percent quarter on quarter. Thus, consolidated EBITDA/tonne was down at $341 as compared to $457 in 1QFY11.
Going forward, while at the end of 3QFY11 performance of Tata Steel Europe (TSE) is likely to be affected by seasonal trends, 4QFY11 is expected to be relatively strong. On the other hand, the company's Indian operations are expected to remain strong because of higher integration levels. We maintain Buy on the stock with an SOTP-based target price of 702.
702 as against the market price of 606.3. Tata Steel's net revenue saw and increase by 25 percent year on year and 8.8 percent quarter on quarter to 70.38 billion on account of higher sales volume, improving product mix and higher realizations.
Capacity utilization in Europe stood at 87 percent as compared to 90 percent in 1QFY11. In Europe, deliveries were down by 9.5 percent year on year and 4.9 percent quarter on quarter to 3.5Million tones, as the quarter is seasonally weak. Group deliveries were down by 5.9 percent year on year to 6 million tonnes and flat quarter on quarter. EBITDA/tonne for TSE declined to $56 as compared to $79 in 1QFY11, as raw-material cost/tonne increased by 20 percent quarter on quarter. Thus, consolidated EBITDA/tonne was down at $341 as compared to $457 in 1QFY11.
Going forward, while at the end of 3QFY11 performance of Tata Steel Europe (TSE) is likely to be affected by seasonal trends, 4QFY11 is expected to be relatively strong. On the other hand, the company's Indian operations are expected to remain strong because of higher integration levels. We maintain Buy on the stock with an SOTP-based target price of 702.