How to trade Tata Steel shares after over 80% plunge in Q4 profit?

After Tata Steel posted a slightly better-than-estimated Q4FY23 earnings on Wednesday, several top brokerages retained positive views on the stock.

Kotak Institutional Equities and Nuvama retained a buy rating on Tata Steel stock while Motilal Oswal has a ‘Neutral’ stance on the counter.

The steel major reported a consolidated net profit of Rs 1,705 crore for the January-March period. This is an 82% fall from Rs 9,756 crore a year ago. The profit figure, however, beat ET Now poll estimate of Rs 749 crore.

Revenue from operations, too, was down 9% year-on-year (YoY) at Rs 62,961 crore for the March quarter. It was Rs 69,323 crore in the same quarter of last year.

Here's a look at what top brokerages are recommending on Tata Steel:

Kotak Institutional Equities: Buy: | Target: Rs 130 | Upside: 18%
Kotak has retained its price target of Rs 130, estimating Tata Steel at 6.4X EV/EBITDA March 2025E. The stock trades at an attractive 5.5X EV/EBITDA FY2025E (ex-CWIP) and offers attractive risk-reward, the brokerage firm said.

Motilal Oswal: Neutral | Target: Rs 130 | Upside: 18%
Motilal Oswal reiterated its 'Neutral' rating on the stock with a revised target price of Rs 110. "We have marginally raised our estimates to factor in the improved outlook with lower input costs," the local brokerage said in a note. The stock is trading at 5.6X FY24E EV/EBITDA and 1.3X FY24E P/B which Motilal said is fully priced in at current levels.

Nuvama: Buy | Target: Rs 131 | Upside: 18%
Nuvama maintained a 'Buy' with a price target of Rs 131. "We broadly retain our FY24E/FY25E EBITDA (TSI: EBITDA/t of Rs 14,844 in FY24E and Rs 16,072 in FY25E) despite Q4’s sharp beat," it said in a note. Tata Steel losses will be reduced in 1HFY24, the domestic brokerage added.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)