Tata Steel Shares Slide 2% After Profit Crashes 64% In Q4

Tata Steel‘s share price was sliding sharply on Thursday morning after the company’s March results disappointed investors.

What Happened: The steel manufacturer's net profit for the March quarter stood at ₹611 crore, marking a decline of around 64% from ₹1,704 crore in the same quarter last year.

The Tata Group company's revenue from operations was ₹58,687 crore, down about 6.7% from ₹62,961 crore in the corresponding quarter of the previous year. Both the bottom line and topline missed analysts' estimates, which had projected a profit of around ₹1,000 crore and revenue of ₹60,000 crore.

Analyst Reactions: Jefferies maintained its “buy” rating on the stock with a target price of ₹200. The research firm highlighted that in the March quarter, Tata Steel’s EBITDA rose by 5% quarter-on-quarter, though it declined by 9% year-on-year.

Notably, this was 7% above the market estimates. The standalone EBITDA per ton decreased by 12% quarter-on-quarter, mainly due to lower average selling prices (ASP). However, the EBITDA per ton loss improved from $191 in the third quarter to $40 in the fourth quarter.

Tata Steel’s net debt remained flat quarter-on-quarter. The analysts also pointed out that the company has announced plans to infuse $2.1 billion into its overseas holding company to repay existing debt and support restructuring costs in the UK.

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Morgan Stanley maintained an “equal-weight” rating on Tata Steel with a target price of ₹135 per share. The global brokerage firm said that Tata Steel’s March-quarter consolidated EBITDA beat its expectations, driven by better-than-expected performance in both its domestic and overseas businesses.

The report also mentions that the Tata Steel Kalinganagar Phase 2 expansion remains on track, ensuring continued growth in its domestic operations. However, for the UK business, analysts noted that the existing heavy assets are nearing their closure, indicating potential challenges ahead for the company’s operations in that region.

Motilal Oswal also maintained its “neutral” rating for the stock. Revenue came in at ₹58,700 crore which was lower than the brokerage’s estimate of ₹61,200 crore. However, the analyst said that the company’s EBITDA at around ₹6,600 crore beat its expectations. EBITDA per tonne at ₹8,271 was 10% higher than the domestic brokerage’s estimate.

Price Action: Tata Steel’s share price was down 2.18% to trade at ₹170.45 as the markets opened on Thursday.

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