Tata Steel stock falls 5% after surprise net loss in Q3. Should you buy, sell or hold?
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Shares of fell nearly 5% to Rs 112 in Tuesday’s intraday trade on BSE after the company reported a surprise consolidated net loss of Rs 2,224 crore for the December quarter. The company had posted a profit of Rs 9,572 crore in the last-year period and Rs 1,514 crore in the previous September quarter.

Its revenue from operations, meanwhile, dropped 6% year-on-year (YoY) to Rs 57,084 crore in the quarter that ended in December.

Analysts had estimated Tata Steel to report a profit in the December quarter. For instance,

had expected a profit of Rs 4,300 crore.

During the quarter, consolidated EBITDA stood at Rs 4,154 crore, with an EBITDA margin of 7%. The profitability was affected by a sharp drop in realisations and spreads in Europe.

For the India business, the company has reported a profit of Rs 1,918 crore with a revenue of Rs 32,325 crore for the period under review.

India deliveries stood at 4.74 million tonnes, and were up 7% YoY, primarily driven by 11% growth in domestic deliveries, which has also enabled an improvement in product mix.

“In Europe, our deliveries were lower in 9MFY23 due to a slowdown in demand. Recession concerns weighed on steel prices, which coupled with elevated energy costs affected our performance,” said T V Narendran, CEO & MD, Tata Steel.On the outlook, Tata Steel said that there is a visible pick up in steel prices across key regions on improved China demand outlook and sustained spending on infrastructure in India.

At 10.33 am, the scrip was trading 3.7% lower at Rs 113.3 over its previous day’s closing of Rs 117.6 apiece. The stock has also fallen 5% year-to-date.

Should you buy, sell or hold Tata Steel stock? Here’s what analysts say:

JPMorgan maintained an overweight rating on Tata Steel with a target price of Rs 140.

“Large PAT loss was driven by inventory NRV hit in Europe. The key negative was a sharp decline in Europe EBITDA/Ton, and steel prices in India have increased by 10% from Dec exit levels,” it said.

Motilal Oswal
Motilal Oswal maintained its Neutral rating on Tata Steel with a target price of Rs 123.

“The stock is currently trading at 5.3x FY24E EV/EBITDA and 1.2x P/B. We believe the stock is fully valued, given the current strong steel price outlook globally and Tata Steel’s strong presence in Europe. Though steel prices have moved up sharply over the last few weeks, the increase is offset by higher coking coal prices, which could affect margins in 4QFY23,” it said.

Jefferies has a buy rating on Tata Steel with a target price of Rs 150, which shows an upside potential of 32% from the current market prices.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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