This Tata group company posted better Q2; Jefferies sees up to 27% potential gains
For the September quarter, Tata Steels opex led beat was from both the domestic as well as other business.
Tata Steel shares will gain traction in Thursday's session (November 7) after the company's better-than-expected Q2 earnings. Ahead of the company's earnings the stock ended nearly 1 per cent higher at Rs 153.6 per share on the BSE.
For the July-September quarter, the company's net profit came in lower than estimates of Rs 890 crore at Rs 833 crore, up 18 per cent in comparison to the adjusted PAT of Rs 703 crore in the corresponding period of the same period last year.
Revenue from operations came in better-than-estimates at Rs 53,905 crore in comparison to Rs 55,682 crore, reporting a 2 per cent decline year-on-year (YoY).
On the operational front, EBITDA came in much higher than forecasts of Rs 4,819 crore at Rs 6,141 crore during the reporting September quarter, in comparison to Rs 4,268 crore clocked in the same quarter of the previous year. Likewise, the margin also increased sharply from 3.7 per cent or 370 basis points to 11.4 per cent from 7.7 per cent in the same period last year. Zee Business analysts estimated margins to comein at 9.14 per cent.
Here's how global brokerages rate Tata Steel after its Q2 earnings
Jefferies has continued with its buy call and a target price of Rs 195, implying potential gains of 27 per cent from the previous close.
Similarly, Morgan Stanley has continued with its 'equalweight' call and a target of Rs 175. As per the brokerage, the company has logged opex led strong beat, at both domestic and "other" businesses. The brokerage highlighted that while the company's UK/Netherlands businesses were slightly weak, others did better.
Also, it added that the key monitorables are management guidance on domestic and international business demand and spreads trajectory for H2.
JP Morgan has also continued with its overweight rating on the counter with a Rs 180 per share target. As per the brokerage, the company's Q2 - EBITDA beat is led by a lower-than-expected employee costs and other expenses. Further, it doesn't see any negatives from the earnings print. Further, the company's management commentary on debt reduction will be important. The global brokerage expects the stock to react positively given the headline beat on consensus numbers.
Tata Steel stock performance
In the last one year, shares of Tata Steel have gained nearly 29 per cent.
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