Views on Tata Steel Ltd 2QFY2016 Result - Angel Broking

Views of Mr. Rahul Dholam (Sr. Research Analyst - Metals & Mining, Angel Broking) on Tata Steel Ltd2QFY2016 Results:

Tata Steel 2QFY16 Results first cut: EBITDA disappoints led by higher material costs; Corus EBITDA turns red

"Standalone revenues declined 12% on a YoY basis and 5% sequentially to INR 9531cr, 7% ahead of our estimate of INR 8,879cr. Realisation per tonne at $629/tonne was higher than our estimate of ~$586/tonne. Material costs however increased significantly at INR 2,739cr (~28.7% of revenues), vs. our estimate of INR 2,084cr. We await clarity from management if the entire imported inventory of iron ore is consumed. Led by the higher than expected raw material expenses, EBITDA was lower than expectations at INR 1,861cr vs. our estimate of INR 1918cr. EBITDA per tonne remained flat sequentially at $123 as against $124 in 1Q16 (our estimate - $127).

Corus reported an EBITDA loss of INR 139cr as against our expectations of EBITDA profit of INR 984cr. Corus volumes were 7% below our estimate at 3.27MT, while revenue was in line with estimate led by higher than expected realisation. Raw Material expenses too were in line with expectations indicating higher than expected operating expenses.

Consolidated revenue declined 18% YOY at INR 29,305cr, as against our expectation of INR 28,504cr. Consolidated EBITDA came in at INR 1,705, down 54% YoY, and well below our expectations of INR 2,632cr. Consolidated net profit increased 22% to INR 1,528cr as led by a jump in other income (sale of investments. We retain our NEUTRAL rating on the stock."

Shares of TATA STEEL LTD. was last trading in BSE at Rs.225.6 as compared to the previous close of Rs. 235.8. The total number of shares traded during the day was 1508769 in over 15318 trades.

The stock hit an intraday high of Rs. 236 and intraday low of 224.55. The net turnover during the day was Rs. 345097043.

Source : Equity Bulls

Keywords