Tata Steel shares dip after weak second quarter results; brokerages lower targets
CLSA sees a downside risks to Indian steel prices as they are trading at 12-16 per cent premiums. CLSA has also cut FY23-25 EBITDA by 18-25 per cent on lower profitability, largely in Europe
Tata Steel failed to capture the overall mood of the stock markets on Tuesday as the counter got hammered after a weak July-September quarter results. The stock was among the top losers on Nifty and Sensex in the early morning trade. It was trading at Rs 100, down by 1.53 per cent on NSE.
The steel major reported 90 per cent Year-on-Year drop in its consolidated net profit at Rs 1297 crore for the quarter ended 30 September 2022 versus Rs 12,548 crore. It was down 80 per cent sequentially. The revenues for the reporting quarter stood at Rs 59,878 crore versus Rs 60,387 crore in the corresponding quarter in the last fiscal.
Several top brokerages revised their targets downwards on Tata Steel with CLSA estimating the highest downside. The brokerage sees a 12 per cent decline in the price from Rs 102 (Price at which recommendation was made) and recommends a SELL on this stock.
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CLSA has also cut FY23-25 EBITDA by 18-25 per cent on lower profitability, largely in Europe. “Expect Indian margins to improve but see meaningful downside to European profitability on lower spreads & contract revisions,” the brokerage firm said in its report.
Recommendations from Other Brokerages
- Jefferies maintains Hold with a price target of Rs 95
- Morgan Stanley maintains ‘Equalweight with target of Rs 95
- However, Macquarie remains bullish on the stock and has put a price target of Rs 117, maintaining an ‘Outperform’ rating on it.
Q2FY23 Financial Highlights
Source: Tata Steel Filing
(Disclaimer: The views/suggestions/advises expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)