Buy Tata Steel, target price Rs 1700: Axis Securities

Axis Securities has buy call on Tata Steel with a target price of Rs 1700. The current market price of Tata Steel Ltd. is Rs 1369.7. Time period given by analyst is one year when Tata Steel Ltd. price can reach defined target.

Tata Steel Ltd., incorporated in the year 1907, is a Large Cap company (having a market cap of Rs 167441.23 Crore) operating in Metals - Ferrous sector.

Tata Steel Ltd. key Products/Revenue Segments include Steel & Steel Products, Power and Other Operating Revenue for the year ending 31-Mar-2021.



Financials
For the quarter ended 31-12-2021, the company reported a Consolidated Total Income of Rs 60842.72 Crore, up .48 % from last quarter Total Income of Rs 60553.63 Crore and up 52.84 % from last year same quarter Total Income of Rs 39809.05 Crore. Company reported net profit after tax of Rs 9415.88 Crore in latest quarter.

Investment Rationale
The brokerage initiates coverage on Tata Steel with a BUY recommendation and a Target Price (TP) of Rs 1,700/share, implying an upside of 26% from the CMP. The stock is currently trading at 4.6x EV/EBITDA (consensus 1-Year forward) below its 10Y average of 6.3x. It expects steel prices to remain resilient which would drive strong cash flows for the company in the upcoming quarters and allow it to continue deleveraging even after pursuing its growth Capex. Although higher coking coal prices would impact the margins in 1HFY23, the margin trajectory continues to be robust and above the historical average, thereby driving profitability for the company.

Promoter/FII Holdings
Promoters held 33.92 per cent stake in the company as of 31-Dec-2021, while FIIs owned 21.36 per cent, DIIs 18.1 per cent.