IIFL on Tata Steel: Profitability set to improve, ADD
Tata Steel’s rising production cost in India has emerged a key concern among investors
According to IIFL report, in the coming quarters, operating leverage from higher production, lower raw-material cost, and reduction in a few operating expenses would bring back Ebitda/tonne to ~US$300.
Weak demand in Europe continues to haunt outlook despite several cost reduction initiatives. To check rising debt, Tata Steel may choose to delay the second phase of Kalinganagar expansion and divest non-strategic investments. At 5.7x FY14ii EV/Ebitda, we believe valuations factor in short-term concerns. ADD, the brokerage added.
The report was published by IIFL’s Institutional Equities Research desk.
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India Infoline Research Team / 10:47, Aug 24, 2015
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