*Tata steel Q4FY21 Concall highlight:*
*Outlook:*
· Asian steel prices are expected to remain buoyant amidst strong demand recovery, production cut in china and elevated raw material prices
· Seaborn iron ore prices is also expected to remain elevated whereas coking coal should remain calm in near future.
*Expansion projects*-The Pellet plant and Cold Roll Mill complex at Kalinganagar is under construction. The 5mtpa expansion project has been restarted. Project is expected to be commissioned by around the second half of FY24.
Update on bhushan merger and other operations TSBSL merger with Tata Steel is progressing ahead while the merger of Tata Metaliks and Indian Steel and Wire Products with Tata Steel Long Products is also underway. Also, the separation of Tata Steel's Netherlands and UK operations is on going and the management would be in a more finite position to comment on the status of the same in the next two months.
*Update on Capex*-, Tata Steel's full year free cash flow after capex was around INR 24,000 crore. The company accelerated Capex allocation for the Pellet plant and CRM complex at Kalinganagar and restarted work on 5 MTPA expansion in Q4. The margins are expected to expand upon completion of both the pellet plant and cold roll mill complex.
*Other highlight*
· Export volumes spike by 52% in FY21
· Tata steel has managed to maintain its leadership in the CV segment with a 38% market share. Moreover, the company has registered 2x growth in the auto component exports segment.
*View*
With continues increase in HRC prices and iron ore prices Tata steel is expected to show improvement in realisation in Q1FY22 and deliver strong performance. HRC realization are up by Rs.6000-7000 from Q4 average price and cost are up by Rs.2000-2500.
In Europe company do more of a contract sales and has less spot sales. The benefit of for price increase will be visible in coming quarter
The debt has significantly come down to Rs75389cr as compared to Rs 116328cr. we expect the improvement in cash flow to further expedite its debt reduction
Volume is expected to increase by 1mn T in India and 1mn T in Europe in FY22
Remain positive on the stock and maintain buy, the stock is trading at an EV/EBITDA of 5x FY23