Indianconstructionindustry Newsalert:Tata Steel remains top sectoral choice

New Delhi : Tata Steel reported good consolidated PAT of R1,900 crore in Q4FY11, up 115% q-o-q but down 29% y-o-y and ahead of general expectations. Ebitda was R4470crore, about 5% lower than our estimates (MSe) but was remarkable for performance at Tata Steel Europe (TSE), which delivered Ebitda/t of $85 vs MSe of $57. Tata India reported Ebitda/t of $400, up 4% q-o-q and down 3% y-o-y and 9% lower than Mse.

Q4FY11 results reaffirm our positive stance on Tata, our top pick in Indian Steel sector, since 1) Strong Tata Steel Europe results, driven largely by tight cost performance, should support sentiment on the stock and earnings expectations.

The street was expecting $35-45/t in Q4FY11, and inefficiency of TSE has been the main reason for damp investor sentiment on the stock recently. 2) Post results, investors should begin to appreciate Tata’s efforts to bolster its sustainable cost structure and its progress