Tata Steel share rose over 7% today after the firm reported a strong set of earnings in Q2. Share of Tata Steel gained 7.6% intra day to a 52-week high Rs 529.5 on BSE. In last three sessions, the stock has gained 11.22% in the last 3 days.
The share opened with a gain of 2.56% at Rs 504.70. Tata Steel share is trading higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages.
The share has gained 33.24% during one year and risen 11.33% since the beginning of this year. Total 16.54 lakh shares changed hands amounting to turnover of Rs 86.27 crore on BSE. Market cap of the firm rose to Rs 60,274 crore.
The firm reported a 60% YoY rise in consolidated EBITDA to Rs 6110 crore in Q2 (the highest in the last six quarters), In India, the company's EBITDA (earnings before interest, taxes, depreciation, and amortisation) from India operations rose 4.1 times quarter-on-quarter (QoQ) and 49 per cent year-on-year (YoY) to Rs 6,025 crore, led by higher volumes, improved realizations and cost efficiencies.
However, consolidated net profit declined about 50 per cent to Rs 1,665.07 crore in Q2 against net profit of Rs 3,302.31 crore in the corresponding quarter of the previous financial year.
In a separate statement, Tata Steel said it has initiated discussions with Sweden-based SSAB on potential sale of Tata Steel Netherland business, including Ijmuiden steelworks. Tata Steel said it has also initiated the process to separate Tata Steel Netherlands and Tata Steel UK and will pursue separate strategic paths for the Netherlands and the UK businesses in the future.
"Consolidated EBITDA rose 60% YoY to Rs 6110 crore in 2QFY21 (the highest in the last six quarters), and we estimate 3QFY21 to be even stronger at Rs 7160 crore (+98% YoY). Furthermore, net debt fell Rs 8300 crore QoQ to Rs 98,800 crore (the lowest in the last six quarters), led by working capital release of Rs 10,300 crore.
The potential divestment of the company's profitable Netherlands operations to SSAB could lead to further deleveraging. However, its continually loss-making UK operations would remain an overhang on the stock. We raise our FY21/FY22E EBITDA estimates by 38%/9%, factoring in higher steel prices and spreads. Maintain Neutral," the brokerage said.