A day after Tata Steel reported a 21 per cent fall in its consolidated net profit for the April-June quarter, brokerages appear to be divided on the share price of the company.
Domestic brokerage firm Motilal Oswal has maintained a Neutral rating on Tata Steel with a price target of Rs 975 apiece while the global brokerage firm JP Morgan has given an Overweight call with a target price of Rs 1400 per share, implying an upside of nearly 46 per cent.
The company reported a substantial all-around beat was driven by Europe in Q1, JP Morgan said, adding that it sees upside risks to consensus. It said that the company has beaten estimates substantially all around, driven by Europe. Tata Steel Europe reported a record EBITDA up 294 per cent YoY propelled by strong tailwind of contractual prices.
While Q2 is seasonally weak, the second half of FY23 should rebound, JP Morgan said. It added, steel prices have bottomed in India given limited imports and steady underlying demand. The net debt of the company increased during that quarter, mainly accounting for the payout of NINL acquisition.
ICICI Securities has maintained a Reduce rating given the current scenario for metals. The brokerage house kept the price target unchanged at Rs 827 apiece which is also its 52-week low. It waits for the EBITDA contraction cycle to play out and expects the downcycle to last 4-5 quarters with a peak being attained in Q2FY22.
Earlier on Monday, the steel major posted a 21 per cent fall in its consolidated net profit to Rs 7,714 crore for the April-June quarter due to higher costs of materials and finance costs, the company said in a regulatory filing. The company had reported a net profit of Rs 9,768 crore in the same period of 2021-22.
Tata Steel share price jumped nearly 1.5 per cent to touch day’s high level of Rs 974 per share on the BSE intraday on Tuesday, as against 0.4 per cent rise in the S&P BSE Sensex.
The board of Tata Steel had on May 3 considered a proposal to split the stock in the 1:10 ratio, which means that every shareholder will get 10 shares for every single holding. It has fixed July 29, 2022, as the record date to determine shareholders’ eligibility for shares split having a face value Rs 10 each.