Tata Steel shares declined over 2 per cent on Wednesday as its consolidated net loss for quarter ended June 30, 2016 widened to Rs 3,183 crore as against net loss of Rs 316.91 crore for the same quarter in the last year following sale of a business in Europe. The company sold its Europe division at a loss of Rs 3,296.48 crore to Greybull Capital LLP , which was recognised in the first quarter.
At 2.53 pm, Tata Steel shares were trading 0.24 per cent down at Rs 372.70. The scrip opened at Rs 369.50 and touched a high and low of Rs 377.75 and Rs 363.40, respectively. Later, the company wiped off its losses and closed 0.04 per cent up at Rs 373.75.
The company’s revenue slipped by 5.15 per cent to Rs 26332.33 crore for the quarter under review against Rs 27761.66 crore in the same quarter last year.
The company’s stocks fell despite the steel major posting better operating performance in first quarter. Its operating profit or EBITDA (earnings before interest, tax, depreciation and amortisation) at 21 per cent was higher than the year-ago period following improved operating performance in India, Europe and South East Asia.
Analysts like Religare Institutional Research said that the results are although better than expectations, but the company has presented a weak outlook for the second quarter. It has mainatined a ‘Sell’ rating on the stocks with target price of Rs 325. It further added that although earnings have recovered, incremental earnings visibility due to higher coking coal prices remains low.
According to Jefferies margins will fall in second quarter, but sees Europe margins expanding in the near term. It has raised their price target on the stock to Rs 319 from Rs 270.