Shares of Tata Steel Ltd were trading flat with a negative bias in the morning session on Thursday after investors rushed to book profits even as the Tata Group company swung into black, posting a consolidated net profit of ₹513 crore in the third quarter against a loss of ₹2,224 crore a year ago.
Analysts eagerly await the conference call that the steelmaker will be hosting later today at 12.30 pm to discuss the earnings report.
At 11.00 am, the Tata Steel stock was trading 0.89% lower at ₹133.95 apiece on the NSE. The stock has gained over 12% in the last six months while it has fallen 4% since the beginning of this year.
Global broking firm Morgan Stanley has maintained its 'Equal weight' rating on the stock with a target price of ₹120 per share. Domestic Ebitda was ahead of its estimates, helped by both high realisation and better costs. Consolidated Ebitda was even better despite weakness in Europe.
CLSA too has maintained its 'Outperform' rating on Tata Steel, with a target price of ₹145 per share. The foreign brokerage said that Tata Steel's India business profitability was sharply above estimates.
The steelmaker's net debt was flat quarter-on-quarter at ₹77,400 crore, with strong liquidity at ₹23,349 crore. India revenues remained stable at ₹35,011 crore, supported by consistent growth in deliveries.
Crude steel production in India rose to 5.35 MT, contributing to the best-ever third quarter sales of 4.88 MT. However, revenue from Europe operations declined by 12.5% to ₹18,141.97 crore, impacted by production shortfalls in the UK and relining activities in the Netherlands.
The company incurred ₹4,715 crore in capital expenditure during the quarter and ₹13,357 crore between April and December.
Steel companies benefitted in India from an uptick in steel prices amid strong demand fueled by heavy infrastructure spending by the government, but higher coking coal costs weighed on the gains. The companies may not have been able to pass on the full impact of rising costs due to the availability of cheaper Chinese imports in the market.
"Global operating environment has been complex, with economic slowdown in China and geopolitics weighing on commodity prices in general. During this quarter, China has exported between 7 to 8 million tons of steel every month, which is the highest since 2015 and this has adversely impacted global steel prices as well as profitability," said chief executive officer TV Narendran.
In relation to the merger with Tata Metaliks, the company's Board has approved to issue 79 shares of Tata Steel for every 10 Tata Metaliks shares held by eligible shareholders.
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