What should investors do with Tata Steel shares post Q4 results?
The stock opened higher at Rs 1,282 against the previous close of Rs 1261.45 on BSE on Thursday.
- May 5, 2022,
- Updated May 5, 2022 10:30 AM IST
Shares of global steel major Tata Steel Limited (TSL) were trading higher in early trade on Thursday after the company posted good set of numbers for the quarter ended March 2022.
Tata Steel posted a 37 per cent jump in consolidated net profit at Rs 9,835.12 crore for the quarter ended March 2022, mainly on account of higher income. It had reported a net profit of Rs 7,161.91 crore in the year-ago quarter, it said in a BSE filing.
Further, the board of the company announced a dividend of Rs 51 per share while also recommending a 10:1 stock split.
Also read: Tata Steel announces 10:1 stock split; dividend of Rs 51
The stock opened higher at Rs 1,282 against the previous close of Rs 1261.45 on BSE on Thursday. With a market capitalisation of more than Rs 1,57,000 crore, the shares stand higher than 5 day, 50 day, 100 day and 200 day moving averages but lower than 20 day moving averages.
IDBI Capital noted that despite weak macro environment globally, steel prices have increased in the past three months. We believe strong profitability at India operations and restructuring at Tata Steel’s European operations will lead to further fall in net debt over FY22-FY24E even as Tata Steel continues to pursue growth capex in India.
"We lower our FY23 EBTIDA estimate by 10% given sharp rise in coking coal prices in the past three months but we broadly maintain FY24 estimates. We derive a SOTP-based target price of Rs 1,673 (earlier Rs 1,825) and maintain our 'Buy' rating on the stock," the brokerage firm said.
ICICI Securities noted that Tata Steel surprised on deleveraging and capital allocation while consolidated print was in line. Q4FY22 witnessed Rs 140 billion of FCF, taking net debt to Rs 510 billion, down Rs 150 billion.
"The capital allocation has surprised positively for FY22; conservative capital allocation with capex through internal accrual and increasing shareholder return in an elevated steel price environment should also define FY23E, in our view," it said.
"We maintain 'Buy' on Tata Steel with an unchanged target price of Rs 1,700 per share. We expect consensus earning upgrade post Q4FY22 results. TSL has announced a stock split of 10:1.
Motilal Oswal expects steel prices to come under pressure. Further, it added that India will be entering into a monsoon season in the next two months, which will cap any further price hikes from the current level.
It highlighted that the strong FCF (free cash flow) supports downside while peak steel prices and coking coal prices cap any further margin expansion from current levels.
"We maintain our neutral rating with SoTP-based (sum of the parts) target price of Rs 1,500," the brokerage house said.
Shares of global steel major Tata Steel Limited (TSL) were trading higher in early trade on Thursday after the company posted good set of numbers for the quarter ended March 2022.
Tata Steel posted a 37 per cent jump in consolidated net profit at Rs 9,835.12 crore for the quarter ended March 2022, mainly on account of higher income. It had reported a net profit of Rs 7,161.91 crore in the year-ago quarter, it said in a BSE filing.
Further, the board of the company announced a dividend of Rs 51 per share while also recommending a 10:1 stock split.
Also read: Tata Steel announces 10:1 stock split; dividend of Rs 51
The stock opened higher at Rs 1,282 against the previous close of Rs 1261.45 on BSE on Thursday. With a market capitalisation of more than Rs 1,57,000 crore, the shares stand higher than 5 day, 50 day, 100 day and 200 day moving averages but lower than 20 day moving averages.
IDBI Capital noted that despite weak macro environment globally, steel prices have increased in the past three months. We believe strong profitability at India operations and restructuring at Tata Steel’s European operations will lead to further fall in net debt over FY22-FY24E even as Tata Steel continues to pursue growth capex in India.
"We lower our FY23 EBTIDA estimate by 10% given sharp rise in coking coal prices in the past three months but we broadly maintain FY24 estimates. We derive a SOTP-based target price of Rs 1,673 (earlier Rs 1,825) and maintain our 'Buy' rating on the stock," the brokerage firm said.
ICICI Securities noted that Tata Steel surprised on deleveraging and capital allocation while consolidated print was in line. Q4FY22 witnessed Rs 140 billion of FCF, taking net debt to Rs 510 billion, down Rs 150 billion.
"The capital allocation has surprised positively for FY22; conservative capital allocation with capex through internal accrual and increasing shareholder return in an elevated steel price environment should also define FY23E, in our view," it said.
"We maintain 'Buy' on Tata Steel with an unchanged target price of Rs 1,700 per share. We expect consensus earning upgrade post Q4FY22 results. TSL has announced a stock split of 10:1.
Motilal Oswal expects steel prices to come under pressure. Further, it added that India will be entering into a monsoon season in the next two months, which will cap any further price hikes from the current level.
It highlighted that the strong FCF (free cash flow) supports downside while peak steel prices and coking coal prices cap any further margin expansion from current levels.
"We maintain our neutral rating with SoTP-based (sum of the parts) target price of Rs 1,500," the brokerage house said.