This Tata Group Stock Is Good Buy For Target Price Of Rs 1650: Hem Securities

Tata Steel is Tata Group's multinational steelmaker based in Jamshedpur, Jharkhand, India. It Company is headquartered in Mumbai, India. With a market capitalization of Rs 158304.96 crore, the company is one of the largest steel-makers in India with a presence in the international market such as Europe.

Why should you invest in the company?

According to the brokerage Hem Securities, "Company would expand its production through scrap recycling units in the Western and Southern India. The management stated that Coking coal consumption cost is expected to increase by ~$100/ton in India and €50-€60/ton in Europe in Q1 FY23 as compared to the consumption cost of Q4 FY22. The company guided that In Q1 FY23, net realizations in India would be higher by ₹8,000-₹8,500/ton and in Europe, the same would increase by €60/ton, as compared to the net realizations of Q4 FY22. The company would set up an electric arc furnace (EAF) facility in Northern India (likely in Punjab), which will be supported by the scrap recycling facility."

Q4FY22 Results

The brokerage has said, "The company improved its net debt to ratio 0.52x in FY22 from 0.98x in FY21, 1.42x in FY20. The improvement in the ratio on YoY basis was primarily attributed to reduction of debt from Rs.75389 cr (FY21) to Rs.51049 cr (FY22). Consolidated EBITDA stood at Rs 63490 cr grew by 108% YoY with margin of 26% (increased by 600 Bps YoY). Revenue for the quarter stood at Rs.243,959 cr, up 56% YoY." The revenue from operations increased on a sequential basis on account of higher steel prices in Europe and higher deliveries in India and Europe. Raw material cost was higher on a sequential basis due to an increase in coking coal prices. This was offset by the decline in iron ore prices in Europe. "In Q4 FY22, in its Indian operations (including Tata Steel standalone and Tata Steel Long Products Ltd), crude steel production increased by 1.9% QoQ and 3.2% YoY to 4.9 million tons (MT)," it added.

Buy for a target price of Rs 1650

According to the brokerage, "Company reported another operationally strong quarter with sales of Rs 69,324 cr (+38.57% YoY). In FY22, the company mined 29.4 MT of iron ore. It would expand its mining capacity to 60-65 MTPA by 2030. Management guided to further reduce debt by $ 1 bn in FY 23. Ramp-up of NINL cold will provide some additional volumes. We have maintained BUY rating on stock and value the stock at 3.81x FY24 earnings to arrive at the target of Rs.1650."

Disclaimer

The stock has been picked from the brokerage report of Hem Securities. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decisions.