Tata Group Stock Cuts Debt, Declares 360% Dividend, “Buy” Says Top Brokerage

Broking firm Anand Rathi has a "buy" call on the stock of Tata Group company, Tata Steel. The brokerage sees a decent upside of nearly 19% on the stock from the current levels.

Tata Steel Quarterly performance

Tata Steel's Q4FY23 performance was above Anand Rathi's estimate. On a consolidated basis, Tata steel topline fell by 9.2% YoY while it grew by 10% QoQ to Rs 629,615 million led by improvement in Indian operations. However, drop in global steel prices led to fall in quarterly revenue.

EBITDA fell by 52% YoY while it increased by 78% QoQ to Rs72,192 million primarily driven by higher deliveries in India and decline in raw material cost (i.e coking coal cost). EBITDA margin went down by 1021bps YoY and 437bps QoQ to 11.4%.

"EBITDA/tonne increased by for the quarter stood at Rs9,289/tonne (+60% QoQ, -51% YoY).PBT fell by 72% YoY and up by 724% QoQ to Rs33,208 mn majorly due to lower raw material cost and higher topline growth. Net profit stood at Rs15,662 mn in Q4FY23 compare to net loss of Rs25,020 mn in Q3FY23," Anand Rathi has said in its report.

According to the brokerage, Tata Steel has been one of the prominent company in the steel industry over the past few years. "We believe that from H2FY24 company's Indian operations and Europe operation will start witnessing growth trajectory on account of positive domestic demand, softening of coking coal prices and higher realisation. We value the company based on 4.3x EV/EBITDA and maintain our BUY rating with revised target price of Rs.132 (19% upside from CMP)," the brokerage has said.

According to Anand Rathi, net debt decreased by Rs 39,000 mn to Rs 678,100 mn. Although company's liquidity remains strong at Rs 286,880 mn, it noted.

The board of the company has also recommended a dividend of Rs 3.60 per per share of Re 1 each (360%) to the shareholders of the Company for the FY2022-23. The stock of Tata Steel was last seen trading at Rs 108.65 on the Bombay Stock Exchange. The stock has hit a 52-week high of Rs 133 and a low of Rs 82.71.

Disclaimer

The above-mentioned information is purely informational. The article should be treated as informational and not an advisory to invest. Greynium Information Technologies and the Author are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before making any investment decision. The article is picked from the brokerage report of Anand Rathi.