Tata Steel shares lead decline in metal stocks, fall over 5% on weak Q3 earnings

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Published: February 10, 2020 12:40:45 PM

Tata Steel reported a consolidated net loss of Rs 1,228.53 crore for the quarter ended December 31. Among the sectoral indices, Nifty Metal index was the top loser, down 2.71 per cent. Tata Steel was trading 4.71 per cent lower at Rs 22.20 apiece.

Tata Steel, share, Tata Steel, Tata Steel share priceTata Steel said steel demand in India is expected to improve on the back of increasing government spending

Tata Steel shares fell as much as 5.39 per cent to Rs 445.55 apiece on BSE on Monday after the company reported a consolidated net loss of Rs 1,228.53 crore for the quarter ended December 31. The company had posted a consolidated net profit of Rs 1,753.07 crore during the corresponding period a year ago. “Prices have recovered sharply over the past three months, strengthening the margin outlook. Given the challenges in the European business, we cut our FY20/21 EBITDA estimates marginally and maintain Neutral,” Motilal Oswal Institutional Equities said in a research note.

Among the sectoral indices, Nifty Metal index was the top loser, down 2.71 per cent. Tata Steel was trading 4.71 per cent lower at Rs 22.20 apiece, and leading the decline in metal stocks, followed by Coal India, National Aluminium and Vedanta. Tata Steel shares hit an intraday high of Rs 465 apiece in Monday’s trade.

Post Q3 earnings, the brokerage company had maintained neutral rating with a target price of Rs 450, but in Monday’s trade around 12 PM, Tata Steel shares were trading at Rs 448.60 apiece on BSE. “Tata Steel’s (TATA) third-quarter result reflects the challenges faced by the industry, with consol. EBITDA/ton of Rs 3,614 dropping to the lowest level in the past 15 quarters due to a sharp decline in steel prices. TATA thus reported a consol. PBT loss for the first time in 16 quarters,” Motilal Oswal Institutional Equities said.

The company said steel demand in India is expected to improve on the back of increasing government spending. “Tata Steel delivered strong growth in volumes despite poor macroeconomic conditions in India as well as globally. In India, our business model helped us counter the slowdown as we successfully penetrated new markets and expanded our customer universe. We were also able to maintain our sales to the auto segment despite the sluggishness faced by the auto industry. Coronavirus does pose a risk and we are closely monitoring the fallout,” T V Narendran, CEO & Managing Director, Tata Steel said.

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