Decoding Europe & UK – Downgrade to SELL

Tata Steel appears to have funded western cash burn (read: TSE) with support from eastern facilities till date (based on inter company funding/securitization trends). We explore if this support is sustainable or would precipitate an equity raise. After reviewing 6 AR’s of TSE/TSUK, we highlight that efficiency levels have failed to improve, floating debt is exposed to interest rate hikes and risks pertaining to carbon compliance, pension funding, and china’s MES remain. Downgrade to SELL with revised TP of Rs 181/sh (from Rs290/sh).

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