Tata Steel - Pressure mounting on domestic business - Emkay

Reco: REDUCE
CMP: Rs 391
Target Price: Rs 349

- Performance below expectations with negative surprise in domestic business, as EBITDA/ tonne shrank to Rs 14545 (US$264); Europe EBITDA/ tonne stood at US$2.3

- Standalone APAT at Rs 13.4bn, down 10% YoY and flat QoQ; EBITDA stood at Rs 25.2 bn, down 9% each on YoY and QoQ on 6% fall in realizations to Rs 48459/ tonne and high costs

- Europe volume came higher at 3.42 mt raising consol topline by 4% YoY to Rs 341 bn; Realizations fell to US$1123/ tonne; TSH volume stood at 0.77 mt with EBITDA/ tonne at US$5

- Believe, pain in European operation to continue, while domestic business also should see lower margins; Maintain our FY14 estimates; Retain Reduce with TP of Rs 349/ share

Source : Equity Bulls

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