What should investors do with Tata Steel after a robust Q3: buy, sell or hold?

Tata Steel share price added over 3 percent in the morning session on February 7 after the company declared its December quarter earnings.

The steel maker on February 4 reported a consolidated net profit of Rs 9,573 crore for the third quarter ended December 2021, up 159 percent from Rs 3, 697 crore  in the year-ago period. The company’s post-tax profit in the previous quarter was at of Rs 11,918 crore.

Consolidated revenues for the largest private-sector steelmaker in the country stood at Rs 60,783 crore, up 45 percent from Rs 41,935 crore reported in the same period a year ago. Revenues in the preceding quarter stood at Rs 60,387 crore.

The European operations of the company continue to perform better, underpinned by strong improvement in realisations.

Consolidated EBITDA (earnings before interest, tax, depreciation, and amortisation) stood at Rs 15,853 crore for the quarter, which 64 percent higher from Rs 9,652 crore reported in the same period a year ago.

On a sequential basis, consolidated EBITDA declined by 5 percent from Rs 16,618 crore.

The stock was trading at Rs 1,212.55, up Rs 36.40, or 3.09 percent, at 10.24 am. It touched an intraday high of Rs 1,213.40 and an intraday low of Rs 1,166.10.

Here’s what global brokerages have to say about Tata Steel after its Q3 numbers:

CLSA

The global brokerage firm has a “buy” call on the stock with the target at Rs 1,820 a share. It is of the view that Q3 EBITDA was largely in line, adding that India profitability surprised positively. However, the Europe profitability was impacted by higher energy costs.

JP Morgan

The global research firm has an “overweight” call on the stock with the target at Rs 1,850 a share.

“Q3 was a beat with strong underlying quarter and with large net debt reduction. India standalone now reflects both India and BSL. Tata Europe has flat volumes, higher energy cost and repair costs. Market appears to be expecting a sharp steel price correction, with steel prices continuing to move higher,” it added.

Investec

The research firm has a buy call with the target at Rs 2,000 a share. The firm believes that the steel-maker’s performance was in-line, while capital allocation on the Europe business is to be watched.

“Tata Steel expects Indian steel prices to remain resilient, while European prices should remain steady,” it said.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.