Tata Stock Falling After Q3 — Analysts Remain Cautious

Tata Steel‘s share price crashed early on Thursday as the company’s December quarter results disappointed investors.

What Happened: The Tata Group company swung to profit in the October-December quarter, shifting from a net loss of ₹2,501.95 crore in the same period the previous year to a consolidated net profit of ₹522.14 crore. Robust domestic demand effectively countered weaknesses in the European market, attributing to this positive momentum.

The consolidated revenue from operations during the October-December quarter dipped by 3% to ₹55,311.9 crore, compared to ₹57,083.56 crore in the corresponding period last year. Sequentially, there was a 0.7% decline from ₹55,681.93 crore in the preceding quarter.

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The company’s operating profit for the third quarter stood at ₹6,264 crore. The EBITDA margin for the reporting period was reported at 11.3%.

Tata Steel’s net debt currently stands at ₹77,405 crores, the company emphasized its robust liquidity of ₹23,349 crores, including ₹10,825 crores in cash and cash equivalents, in a released statement.

In the context of its merger with Tata Metaliks, the Board has greenlit the issuance of 79 shares of Tata Steel for every 10 Tata Metaliks shares held by eligible shareholders. The company has set February 6 as the record date for determining shareholder eligibility for the amalgamation scheme.

Analyst Reactions: Morgan Stanley maintained its “equal weight” stance on the stock with a price target of ₹120. The research firm said that the steel giant’s international and domestic EBITDA were both strong for the December quarter.

CLSA maintained its “outperform” call on the stock with a price target of ₹145. The brokerage firm said that the company’s numbers managed to beat its expectations on some fronts.

Price Action: Tata Steel’s share price was down 0.78% to trade at ₹134.10 as markets opened on Thursday.

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