Maintain 'Buy' on Tata Steel: Ambit Capital
It has entered in into an MoU for with Thailand's Sahaviriya Steel Industries for potential sale of Teesside Cast Products in the UK.
By ET Bureau |
MUMBAI: Ambit Capital has maintained ‘Buy’ recommendation on Tata Steel after the company entered in into an MoU for with Thailand’s Sahaviriya Steel Industries for potential sale of Teesside Cast Products in the UK.
“While the reduced sales volume (of slabs) on account of TCP mothballing had been factored into our (and street’s) estimates, we have not considered any sale proceeds from TCP in our forecasts.
The cash inflows of US$500m add ~Rs25 per share (or 4%) to the intrinsic value of the stock. Our March 2011 target price is Rs 650, and we maintain our BUY recommendation on the stock. At current prices, the stock is trading at 5.4x EV/EBITDA and 7.8x P/adj. EPS, both on FY12E basis,” the report said.
At 12:32 pm, the stock was at Rs 525.10, up Rs 14.95 or 2.93 per cent on the NSE. It touched a high of Rs 529.35 and low of Rs 520.15 in trade so far.
“While the reduced sales volume (of slabs) on account of TCP mothballing had been factored into our (and street’s) estimates, we have not considered any sale proceeds from TCP in our forecasts.
The cash inflows of US$500m add ~Rs25 per share (or 4%) to the intrinsic value of the stock. Our March 2011 target price is Rs 650, and we maintain our BUY recommendation on the stock. At current prices, the stock is trading at 5.4x EV/EBITDA and 7.8x P/adj. EPS, both on FY12E basis,” the report said.
At 12:32 pm, the stock was at Rs 525.10, up Rs 14.95 or 2.93 per cent on the NSE. It touched a high of Rs 529.35 and low of Rs 520.15 in trade so far.
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