Tata Steel Ltd (Q2 FY14)

India Infoline News Service | Mumbai |

Tata Steel’s topline increased 7.4% yoy to Rs366bn; higher than our estimate of Rs353bn.

CMP Rs359, Target Rs382, Upside 6.4%
  • Tata Steel reported strong numbers during the quarter on the back of higher volumes across regions and cost saving measures in Europe

  • Standalone operations operating profit was higher due to increase in volumes and sharp improvement in FAMD division

  • Adjusted EBIDTA/ton at Corus stood at US$26 in Q2 FY14, higher than our estimate of US$20/ton due to various cost saving measures taken

  • South East Asia operations EBIDTA improved over last quarter on the back of  higher sales volume

  • Consolidate operating profit growth stood at 60.5% yoy to Rs37bn, higher than our estimate of Rs32bn

  • PAT of Rs9.2bn was way above our estimate due to a tax write back and higher other income

  • Downgrade to Market Performer after the strong run up in the stock with a revised 9-month price target of Rs382

Result table
BSE 694.95 9.10 (1.33%)
NSE 694.70 8.95 (1.31%)

***Note: This is a NSE Chart

 

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(Rs mn)
Q2 FY14
Q2 FY13
% yoy
Q1 FY14
% qoq
Net sales
366,449
341,327
7.4
328,048
11.7
Material costs
(155,270)
(164,972)
(5.9)
(131,786)
17.8
Power and fuel costs
(15,719)
(14,047)
11.9
(14,634)
7.4
Personnel costs
(51,709)
(45,393)
13.9
(47,912)
7.9
Other overheads
(106,697)
(93,814)
13.7
(96,836)
10.2
Operating profit
37,054
23,101
60.4
36,880
0.5
OPM (%)
10.1
6.8
334 bps
11.2
(113) bps
Depreciation
(14,440)
(13,349)
8.2
(14,033)
2.9
Interest
(10,666)
(9,721)
9.7
(9,924)
7.5
Other income
2,034
2,018
0.8
1,836
10.7
PBT
13,981
2,048
582.7
14,760
(5.3)
Tax
(4,472)
(6,608)
(32.3)
(3,514)
27.3
Effective tax rate (%)
32.0
322.6

23.8

Other prov / minority etc
(342)
493
-
(33)
-
Adjusted PAT
9,168
(4,066)
-
11,213
(18.2)
Adj. PAT margin (%)
2.5
(1.2)
369 bps
3.4
(92) bps