Neutral on Tata Steel, target price Rs 1215: Motilal Oswal

Motilal Oswal has neutral call on Tata Steel with a target price of Rs 1215. The current market price of Tata Steel Ltd. is Rs 1173.85. 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 140551.72 Crore) operating in Metals - Ferrous sector.

Financials
For the quarter ended 31-03-2021, the company reported a Consolidated Total Income of Rs 50249.58 Crore, up 26.23 % from last quarter Total Income of Rs 39809.05 Crore and up 43.22 % from last year same quarter Total Income of Rs 35085.86 Crore. Company reported net profit after tax of Rs 7011.50 Crore in latest quarter.


Investment Rationale
The brokerage arrives at TP of INR1,215/sh on FY23E EV/EBITDA of 5x for its India operations and 4x for Europe. Its TP implies EV/capacity of USD902/t, a 30% premium to the past five-year average of USD700/t. It factors in the benefit of likely deleveraging from the current upcycle. Given the limited upside, the brokerage assigns a Neutral rating.

Promoter/FII Holdings
Promoters held 34.4 per cent stake in the company as of March 31, 2021, while FIIs held 18.6 per cent, DIIs 25.4 per cent and public and others 21.6 per cent.