Tata Steel Ltd - Positive surprise from Europe not likely to sustain - Emkay

Reco: HOLD
CMP: Rs 395
Target Price: Rs 416

- Overall in line; EBITDA/ tonne in Europe however, surprises positively at US$35 due to better spreads between RM costs and realizations, which rose QoQ to US$1146/ tonne.

- Indian operations PAT of Rs 13.6 bn, was impacted by higher fixed costs; EBITDA/ tonne though stood at Rs 17483 ($323); while realizations at Rs 51,529/ tonne rose by ~Rs 2500 QoQ.

- Volume however, remained weak in all geographies with Inidian operation at 1.59 mt, Europe at 3.2 mt and SouthEast Asia at 0.72 mt raising concerns for the near term future.

- Believe, European problem is structural in nature and would continue to dent optimism; Domestic volume growth also looks uncertain; cutting estimates with TP of Rs 416; Hold.

Source : Equity Bulls

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