The brokerage, which has a ‘buy’ rating and target price of Rs 950 on Tata Steel, said long products segment also reported strong operating earnings of Rs 500 crore.
is a 72.65 per cent-owned subsidiary of Tata Steel and has contributed around 13 per cent and 14 per cent of consolidated revenues and EBITDA, respectively, in last 10 quarters, said brokerages.
Shares of Tata Steel ended up 3 per cent at Rs 921.20 on Thursday while Tata Steel BSL ended up 4.43 per cent at Rs 60.15.
“This implies standalone profitability helped by better realisations and also benefiting from inter-company iron ore sales is likely to be better than our estimate (Rs 25,200/tonne),” said CLSA
The brokerage pointed out that spot steel prices are Rs 7,000 to Rs 8,000 per tonne higher than the fourth quarter average and auto sheet contracts are up for renewal in April.
Morgan Stanley has also maintained ‘overweight’ rating with a target price of Rs 1,000.
“Given stronger than expected performance in subsidiaries (
and Tata Steel BSL), we see potential for beat at the consolidated level in 4Q on EBITDA and net debt expectations. Furthermore, with stronger than expected price hikes so far in the June quarter, we see potential upside risks to our and consensus F22 (financial year 2021-22) estimates for Tata Steel,” said Morgan Stanley.
