20 May 2015
4QFY15 Results Update | Sector:
Metals
Tata Steel
BSE SENSEX
27,837
Bloomberg
Equity Shares (m)
M.Cap. (INR b) / (USD
b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Free float (%)
S&P CNX
8,423
TATA IN
971.2
368.5/6.0
579 / 311
7/-23/-37
68.7
CMP: INR361
TP: INR504 (+39%)
Buy
Below est; FAMD & SEA disappoints; Capex discipline is positive
Consolidated EBITDA declined 50% QoQ to INR15.4b. This is 54% below our
estimates due to (1) unanticipated provisioning of INR9.9b (INR1.9b towards DMF
+ INR6b towards translation loss + INR2b receivable w/off in China), (2) loss at
FAMD and (3) squeeze between steel & scrap prices in South East Asia (SEA).
Reported loss after tax of INR57b included INR48b impairments and INR1.3b tax
write back. Adjusted loss after tax was INR8.6b (v/s est. of INR4.6b PAT). During
FY15, there is a total impairment of INR64b on account of Long product UK
(INR28b) and iron ore and coking coal overseas assets. Reported book value has
declined 23% YoY to INR323/share (includes goodwill of INR138/share).
TSI (India business) reported EBITDA of INR16.8b, 18% below estimates largely due
to provisioning of INR2b towards DMF and failed recovery in FAMD. EBITDA per
ton is ~INR7800/t if adjusted for DMF (v/s est. of INR8002/t). We expect royalties
to fall 50% by end of FY16 due to fall in domestic iron ore prices, which will offset
effect of DMF. Realization was in-line. FAMD will not be able to recover 60-70% of
its profits as merchant sale of minerals is not permitted. Consequently, we have
cut TSI EBITDA by 3% to INR147b for FY17. On restart of captive iron ore mining,
iron ore costs will fall and drive of margin recovery for TSI.
TSE deliveries were 5% above estimates, while EBITDA/t was USD44/t. SEA
remains under pressure due to squeeze between steel & scrap prices. The
pressure on margins is likely to continue on competition from China. We have cut
SEA EBITDA by 76% to INR1.8b for FY17.
Target price unchanged:
Consolidated EBITDA is cut by 5% to INR208b for FY17.
Net debt too is cut by 11% to INR743b due to lower capex during FY15-17. SOTP
remains unchanged at INR504/share based on FY17 SOTP. We believe margin
recovery and volume growth in India will drive equity value. Maintain
Buy.
Avg Val(INR M)/Vol ‘000
2596/5799
Financials & Valuation (INR Billion)
Y/E MAR
Sales
EBITDA
Adj. PAT
EPS (INR)
EPS Gr(%)
RoE (%)
P/E (x)
P/BV
2015 2016E 2017E
1,395 1,302
128
3
2.9
148
26
26.6
199
13.8
13.6
1.8
7.4
1,418
208
62
63.7
140.0
253
28.2
5.7
1.4
5.3
-91.9 829.4
1.3
126.4
2.0
BV/Sh. (INR) 185
EV/EBITDA(x)
8.5
Estimate change
TP change
Rating change
5%
Sanjay Jain
(SanjayJain@MotilalOswal.com); +91 22 3982 5412
Dhruv Muchhal
(Dhruv.Muchhal@MotilalOswal.com); +91 22 3027 8033
Investors are advised to refer through disclosures made at the end of the Research Report.
Motilal Oswal research is available on
www.motilaloswal.com/Institutional-Equities,
Bloomberg, Thomson Reuters, Factset and S&P Capital.

Tata Steel
4QFY15 result review
TSI: FAMD disappoints; steel business largely in-line
Net sales up 7% QoQ:
Net sales grew 7% QoQ (-13% YoY) to INR 106.3b. Drop in
blended realization (-5% QoQ to ~INR42,950/t) was offset by 13% QoQ (flat YoY)
increase in steel sales volume to 2.4mt. The management on the call guided for
net realization to decline by further ~INR1,000-1,500/t in 1QFY16 primarily on
resetting of auto supply contracts.
EBITDA down 15% QoQ (60% YoY):
Standalone EBITDA declined 15% QoQ (-60%
YoY) to INR16.8b, with the weakness driven by decline in blended realization,
impact of high cost iron ore inventory and loss at FAMD. It consumed 0.5mt of
Imported/third-party iron ore inventory in 4QFY15. There is an impact of
INR3.9b on account of purchased iron ore consumption and mark to market
provisions. Provision @100% of royalty (i.e. full possible rate) for DMF was made
(courtesy MMDRA Act, 2015), resulting in an impact of ~INR1.9b. EBITDA/t came
at INR7,050, down 24% QoQ (-56% YoY). Adjusting for DMF provision (which we
factored from FY16), EBITDA/t was largely in-line with our estimate.
Depreciation and interest cost increase:
Depreciation cost increased 25% YoY to
INR5.7b due to stamp duty amortization of stamp-duty on mines and leasehold
land at Gopalpur SEZ and is largely one-off. Interest cost was also higher,
increasing 15% YoY to INR5.3b due to interest on income tax assessments for
earlier years and the surge is non-recurring.
Adj. PAT down 8% QoQ (-60% YoY) to INR8.6b:
Excluding one-off net impact of
asset write-off, adjusted PAT was down 8% QoQ (-60% YoY) to INR8.6b, aided by
tax benefit of INR2.1b.
Imported/third party iron ore inventory to phase out in 1H:
TSI still has ~1.5mt
of imported/third-party high cost iron ore inventory at the end of March 2015. It
plans to use ~1mt over the next 6 months (1HFY16) and sell the remaining 0.5mt
in open market. We expect full benefit of restart of captive iron ore mining to
begin reflecting from 2HFY16. Lower iron ore cost, along with decline in coking
coal prices would drive margin expansion for Tata Steel India. Despite continuing
pressure on realization in 1QFY16, in our view.
DMF booked at full possible rate:
It booked provision of INR1.9b in the quarter
accounting for DMF (courtesy MMDRA Act, 2015) at 100% of royalty i.e. at the
highest possible rate. We also expect DMF would be charged at 100% of royalty,
however, we believe that the absolute incremental impact would be minimal.
Royalty and DMF are on ad valorem basis. With domestic iron ore prices
declining sharply over the past few months (~50% fall), royalty-linked cost would
also fall. However, for the next couple of quarters, as lower iron ore prices only
gradually flow into the DMF calculation, we would see impact on account of
DMF.
KPO to start commercial production from 2HFY16:
3mtpa Kalinganagar plant
would start commercial operations from beginning of 2HFY16. The company
targets production of 0.5mt for the year. Heating of the coke oven batteries has
started, which takes about 90 days. Total capex spend on Kalinganagar at the
end of March 2015 was INR200b against Phase-1 budget of INR250b. The
remaining capex will be incurred in FY16E.
2
20 May 2015

Tata Steel
FAMD impacted due to captive use restriction:
The renewal of ferro chrome
mining leases linked to the condition that the production would be used for
captive consumption only. As a result, the earnings potential of Ferro-alloy and
Mineral Division (FAMD) is reduced by 60-70% to ~INR3b until TSI increases its
ferro-alloy capacity (or acquires one). This was negative surprise from the
results.
Key estimate changes:
Our India business EBITDA is cut by 5%/3% for FY16/17E
to account for lower FAMD profitability. Our EBITDA/t estimate for FY17E is cut
to INR12,830/t from INR13,000 earlier.
Exhibit 1: Standalone business performance (INR m)
Y/E March
Steel Sales ('000 tons)
Avg Realn. (INR/tss)
Net Sales
EBITDA
(% of Net Sales)
Steel EBITDA(INR/tss)
Steel EBITDA(USD/tss)
Interest
Depreciation
Other Income
PBT (after EO Inc.)
Total Tax
% Tax
Reported PAT
Adjusted PAT
1Q
2,005
44,719
94,554
28,343
30.0
13,493
241
4,664
4,596
1,442
20,525
6,964
33.9
13,561
13,561
FY14
2Q
3Q
2,038
2,066
44,742
45,011
99,210 101,434
29,379
29,359
29.6
28.9
13,284
13,010
214
210
4,366
4,529
5,510
4,565
3,257
2,648
22,760
22,913
7,173
7,726
31.5
33.7
15,587
15,188
15,587
15,188
4Q
2,407
46,966
121,912
41,088
33.7
15,920
258
4,646
4,616
530
30,937
11,151
36.0
19,786
21,204
1Q
2,100
47,462
104,683
32,559
31.1
14,899
249
4,923
4,933
1,435
32,017
9,337
29.2
22,680
14,800
FY15
2Q
3Q
4Q
2,110 2,129
2,407
49,233 45,337 42,943
107,851 98,968 106,349
30,941 19,799 16,789
28.7
20.0
15.8
14,300 9,293
7,044
236
151
113
4,888 4,624
5,324
4,746 4,573
5,725
2,624 1,083
686
33,106 11,685
5,987
8,342 2,878
-2,154
25.2
24.6
-36.0
24,764 8,806
8,141
15,589 8,806
8,581
FY14
8,516
45,430
417,110
128,169
30.7
14,134
234
18,206
19,287
7,876
97,135
33,013
34.0
64,122
65,540
vs Est
4QE
(%)
8,746 2,407
46,128 42,670
1
417,850 107,489
-1
100,088 20,593
-18
24.0
19.2
-18
11,348 8,002
-12
186
128
-12
19,760 4,671
14
19,976 4,619
24
5,828
532
29
82,795 11,836
-49
18,404 4,006 -154
22.2
33.8 -206
64,391 7,830
4
47,776 7,830
10
Source: MOSL, Company
FY15E
SEA: scrap/steel price squeeze and translation loss impacts profitability
Other businesses (including NatSteel and Thailand) remained under pressure amid
unfavorable scrap/steel price spread. Adjusting for translation loss of INR6b, EBITDA
was a loss of INR5b, increasing from INR2b in 3QFY15. A provision on account of
doubtful recoverable of INR1.9b also impacted profitability in the quarter. But with
scrap route remaining unfavorable to BOF (due to cheap iron ore), we view the
business will remain under pressure.
Exhibit 2: Other subsidiaries quarterly performance
Y/E March
Sales (000 tons)
Realization (USD/t)
Net Sales
EBITDA
EBITDA (USD/t)
1Q
935
941
49,174
767
15
FY14
2Q
3Q
982
1,124
914
844
55,749 58,834
2,134
2,107
35
30
4Q
1,143
831
58,608
853
12
1Q
1,160
753
52,180
217
3
FY15
2Q
3Q
1,030
861
767
816
47,900 43,375
-1,403 -2,105
-22
-40
FY14
4Q
843
665
34,943
-11,889
-226
4,184
880
222,365
5,861
23
INR million
vs Est
4QE
(%)
3,894
950
-11
750
774
-14
178,397 45,809
-24
-15,180
622 -2,011
-64
11 -2,254
Source: MOSL, Company
FY15E
TSE: EBITDA/t of USD44; focus remains on strip and differentiated products
Net sales realization declined 13% QoQ (15% YoY) to USD823/t. Sales volume
grew 15% QoQ (-6% YoY) to 3.8mt.
EBITDA/t came at USD44, up 36% YoY, but lower than our estimate of USD54.
Although European business performed well, UK was impacted as Euro
depreciation impacted UK business realizations.
3
20 May 2015

Tata Steel
Focus remains on strip business and differentiated products. Sales of
differentiated products in the quarter rose 16% YoY.
The management on the call mentioned that it remains in discussion for sale of
its UK long products business.
INR million
1Q
3,700
-1.1
3,200
1.9
1,085
11.8
207,410
-14.9
9,950
4.8
52
FY15
FY14
FY15E
vs Est
2Q
3Q
4Q
4QE (%)
3,820 3,740 3,910 15,550 15,170 3,750
4
-1.0
-4.3
-3.2
15.2
-2.4
-7.2
3,360 3,310 3,810 13,860 13,680 3,641
5
-2.9
3.8
-6.4
6.0
-1.3 -10.5 -39.4
992
950
823
1,011
956
900
-9
-8.5
-4.3
-13.3
-7.8
-5.5
-5.2
202,020 193,990 195,370 846,660 798,790 204,172
-4
-2.6
-4.0
0.7
8.5
-5.7
5.2 -86.4
9,290 13,080 10,530 30,080 42,850 12,254 -14
4.6
6.7
5.4
3.6
5.4
6.0
46
64
44
36
51
54 -18
Source: MOSL, Company
Exhibit 3: Europe business quarterly performance
Y/E March
1Q
Production (000 tons)
3,740
Change (YoY %)
5.9
Sales (000 tons)
3,140
Change (YoY %)
-2.2
Avg. Realization (USD per ton)
1,050
Change (QoQ %)
1.7
Net Sales
184,320
Change (QoQ %)
-3.8
EBITDA
7,770
As % of Net Sales
4.2
Steel EBITDA(USD/tss)
44
FY14
2Q
3Q
4Q
3,860 3,910 4,040
15.6
25.7
14.7
3,460 3,190 4,070
1.2
5.6
19.0
984 1,047
970
-6.3
6.4
-7.3
211,490 207,090 243,760
14.7
-2.1
17.7
5,540 8,600 8,170
2.6
4.2
3.4
26
43
33
Book value declined 23% to INR323/share on impairments
Reported loss after tax of INR57b included INR48b impairments and INR1.3b tax
write back. Adjusted loss after tax was INR8.6b (v/s est. of INR4.6b PAT). During
FY15, there is a total impairment of INR64b on account of Long product UK (INR28b)
and iron ore and coking coal overseas assets. Reported book value has declined 23%
YoY to INR323/share (includes goodwill of INR138/share).
Exhibit 4: Impairments
Source: Company
20 May 2015
4

Tata Steel
Valuation and views
TP: INR 504, upside: 39%; Maintain Buy
Outlook and valuation
Tata Steel India business margins have now bottomed-out and are set to recover
as it regains full benefit of captive iron ore mining. While we expect realization
to drop by ~INR1,200/t in 1QFY16, this would be offset by fall in iron ore cost (as
high cost imported inventory is being gradually used up) and benefit of higher
volumes. We expect India business EBITDA/t to increase to INR12,800 by FY17E
from ~INR7,050/t in 4QFY15. Margin expansion is also aided by fall in coking
coal prices (estimate of USD80/t from 3QFY16 v/s. USD104/t in 4QFY15E).
Tata Steel is relatively better placed amidst the dismal steel environment owing
to its (a) largely debt-free capacity expansion (b) likelihood of improving
demand in Europe amid the recently announced quantitative easing (c) low cost
raw material availability and (d) strong market positioning.
Capacity expansion at 3mtpa Kalinganagar and its strong market positioning will
drive its India steel sales volume to 11.2mt by FY17E from 8.7mt in FY15E, in our
view.
Tata Steel Europe’s (TSE) strategy to focus on strip products, exit long products,
reinforce its reach in Nordic & Transatlantic region, cost reduction, restructuring
of pension plan to defined contribution etc coupled with the benefit of
depreciation of Euro against USD (and thereby against RMB) will help
protect/improve margins.
With the completion of direct shipping ore project in Canada, coking project in
Mozambique and KPO in India, the capex intensity will reduce. Net debt to
EBITDA ratio is expected to decline to 3.6x by FY17E from 5.4x in FY15E.
We have cut our consolidated FY16/17E EBITDA estimate by 7%/5% factoring for
(a) lower ferro chrome business profitability (b) cut to India business realization
and (c) South east Asia business unfavorable scrap spreads, partly offset by
benefit from lower coking coal prices.
Our net debt estimate for FY17E is 11% lower to INR743b v/s. previous estimate
of INR837b (INR96/share) due to better cash flow management in FY15
(primarily at other than India businesses) on account of working capital release
and capex cut to INR100b each in FY16/17E from INR125b earlier.
Impact of lower earnings on equity value is offset by lower net debt. Resultantly,
our FY17E SOTP based TP is largely unchanged at INR504. Maintain Buy.
Key catalyst over the next 12 months
Timely commissioning of Kalinganagar steel plant
EUR depreciation to USD
Trade/Non-trade announcements like anti-dumping duty/BIS checks to protect
the domestic steel industry from growing Chinese/CIS imports
Further progress on plants to sell European long product business
Key risks
20 May 2015
Decline in international iron ore prices
Delay in Kalinganagar commissioning
5

Tata Steel
Exhibit 5: Target price derivation
2013
India
EBITDA per ton (USD)
Sales (m tons)
EBITDA-India
Target EBITDA multiple
EV (India) - (a)
INR/share
TSE and other subs.
EBITDA per ton (USD)
Depreciation per ton (USD)
EBIT per ton (USD)
Sales (m tons)
EBIT
Target EV/EBIT multiple
EV (TSE) - (b)
INR/share
Target EV (c=a+b)
Net Debt (d)
INR/share
D/E x (adj for goodwill)
CWIP (e)
INR/share
(d1) Discount (%)
Investments (f)
INR/share
(d2) Discount (%)
TP (c-d+e*(1-d1)+f*(1-d2))
Target Price (INR /share)
263
7.5
113,232
5.5
622,778
641
11
43
-32
16.7
-29,370
7.0
-205,588
-212
417,190
601,496
619
2.8
2014
234
8.5
128,169
5.5
704,930
726
33
36
-3
18.0
-3,184
7.0
-22,289
-23
682,641
739,219
761
3.0
2015E
186
8.7
100,088
6.5
650,572
670
26
37
-11
17.6
-11,791
7.0
-82,534
-85
568,038
732,623
754
4.1
336,781
347
95,135
98
20
248,304
256
2016E
162
9.3
97,236
6.5
632,033
651
45
33
12
18.0
13,361
7.0
93,524
96
725,557
748,566
771
3.9
213,781
220
2017E
204
11.2
146,758
6.0
880,546
906
53
33
20
18.0
22,152
7.0
155,066
160
1,035,612
743,274
765
3.0
120,781
124
95,135
95,135
98
98
20
20
266,880
489,227
275
504
Source: MOSL, Company
Exhibit 6: Metal sector valuation
Rating
Steel
Tata Steel
JSW Steel
SAIL
Non-Ferrous
Hindalco
Nalco
Vedanta
Mining
Coal India
Hindustan Zinc
NMDC
Buy
Buy
Sell
Buy
Buy
Neutral
Buy
Buy
Sell
Price MCAP
EPS
(INR) (USD M) FY15E FY16E FY17E
361
922
67
139
50
216
360
176
132
5,533
3,511
4,362
4,511
2,011
10,092
35,848
11,699
8,268
2.9
74.5
4.2
11.1
4.9
20.3
24.3
19.2
16.1
26.6
48.1
1.3
10.4
5.6
10.3
23.1
14.8
10.5
63.7
62.6
2.6
19.2
6.5
11.4
29.5
16.3
10.4
P/E (x)
FY16E FY17E
13.6
19.2
49.7
13.3
8.8
21.0
15.6
11.9
12.6
5.7
14.7
26.0
7.2
7.6
19.0
12.2
10.8
12.7
EV/EBITDA (x)
FY16E FY17E
7.4
7.3
11.1
7.5
2.8
7.9
8.2
6.5
7.9
5.3
6.7
9.2
6.1
1.6
6.8
P/B(x)
FY15E FY16E
2.0
1.0
0.6
1.2
1.0
0.8
1.8
0.9
0.6
1.1
0.9
0.8
6.4
5.4
5.2
5.3
1.7
1.6
8.1
1.6
1.5
Source: MOSL, Company
20 May 2015
6

Tata Steel
Story in charts
Exhibit 7: Capacity expansion to drive sales volumes (mt)
India
24
4
14
7
FY12
24
4
13
7
FY13
27
4
14
9
FY14
Europe
26
4
14
9
FY15E
Others
27
4
14
9
FY16E
29
4
14
36
FY14
347
263
234
186
51
FY15E
162
56
204
66
Exhibit 8: EBITDA/t (USD) to improve
India
Europe
11
FY17E
16
FY12
11
FY13
FY16E
FY17E
Source: MOSL, Company
Source: MOSL, Company
Exhibit 9: Return ratios improving
ROCE pre-tax (%)
ROE (%)
28.2
Exhibit 10: Expect PAT to more than double by FY17E
PAT - INR b
61.9
15.0
9.2
7.9
FY12
6.6
0.7
FY13
9.2
FY14
1.3
6.1
FY15E
13.8
11.6
7.7
FY16E
FY17E
34.5
25.8
1.5
FY13
FY14
2.8
FY15E
FY16E
FY17E
Source: MOSL, Company
Source: MOSL, Company
Exhibit 11: Net debt to EBITDA to decline
Net DEBT (INR b)
4.9
4.5
5.4
EBITDA (INR b)
5.1
3.6
Exhibit 12: Tata Steel 1yr fwd EV/EBITDA
11.0
8.5
6.0
6.0
5.6
3.5
1.0
1.6
7.2
EV/EBDITA(x)
Median(x)
Peak(x)
Min(x)
Avg(x)
9.2
FY13
FY14E
FY15E
FY16E
FY17E
Source: MOSL, Company
Source: MOSL, Company
20 May 2015
7

Tata Steel
Financials and valuations
Income Statement (Consolidated)
Y/E March
Net Sales
Change (%)
EBITDA
% of Net Sales
Depn. & Amortization
EBIT
Finace cost
Other income
PBT before EO
EO income
PBT after EO
Tax
Rate (%)
Reported PAT
Minority interest P/L
Share of asso. PAT
PAT (After MI & asso.)
Div. on/Hybrid Sec.
Adjusted PAT
Change (%)
2010
1,023,931
-30.5
80,427
7.9
44,917
35,509
30,221
6,859
12,147
-11,837
310
21,518
6,941
-21,208
152
1,269
-20,092
-8,255
-109.1
2011
1,187,531
16.0
159,956
13.5
44,148
115,808
27,700
2,809
90,917
30,103
121,020
32,459
26.8
88,561
-603
664
89,827
59,724
-n/a-
2012
1,328,997
11.9
124,168
9.3
45,167
79,001
42,501
15,730
52,231
33,619
85,850
36,365
42.4
49,485
-1,731
2,681
53,898
2,225
18,054
-69.8
2013
1,347,115
1.4
123,212
9.1
55,753
67,459
39,681
4,792
32,569
-73,899
-41,330
32,294
-78.1
-73,624
-2,145
903
-70,576
1,798
1,524
-91.6
2014
1,486,136
10.3
164,110
11.0
58,412
105,698
43,368
5,168
67,498
-1,418
66,080
30,582
46.3
35,499
-80
-718
34,860
1,798
34,479
2,162.2
2015
1,395,037
-6.1
127,758
9.2
59,436
68,322
48,478
7,962
27,806
16,615
44,421
23,380
52.6
21,040
-450
-301
21,189
1,798
2,776
-91.9
2016E
1,302,016
-6.7
147,712
11.3
61,182
86,530
45,517
6,289
47,301
47,301
20,324
43.0
26,977
-106
516
27,600
1,798
25,801
829.4
(INR Million)
2017E
1,417,994
8.9
207,529
14.6
69,455
138,074
46,720
6,022
97,376
97,376
34,227
35.1
63,150
-25
537
63,712
1,798
61,913
140.0
Balance Sheet (Consolidated)
Y/E March
Share Capital
Reserves
Net Worth
Minority Interest
Total Loans
Deferred Tax Liability
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Capital WIP
Investments
Goodwill on
consolidation
Curr. Assets
Inventory
Account Receivables
Cash & liquid
investment
Others
Curr. Liability & Prov.
Account Payables
Provisions & Others
Net Current Assets
Appl. of Funds
E: MOSL Estimates
2010
8,867
221,516
230,383
8,841
531,004
16,541
786,768
976,290
608,126
368,164
89,795
54,178
145,418
438,678
186,866
116,240
67,878
67,694
309,464
233,886
75,578
129,214
786,768
2011
9,587
346,226
355,814
8,889
634,184
20,126
1,019,013
981,023
615,338
365,685
135,508
46,881
152,982
652,071
240,552
148,119
140,183
123,216
(INR Million)
2012
9,714
416,623
426,337
10,912
647,385
24,424
1,109,058
1,133,047
712,043
421,003
200,280
26,229
173,546
609,675
255,980
148,785
121,972
82,938
2013
9,714
332,008
341,722
16,694
707,696
31,185
1,097,297
1,352,650
798,379
554,271
137,862
24,974
130,650
580,338
240,912
139,940
106,200
93,287
2014
9,714
395,606
405,320
17,377
851,948
25,550
1,300,195
1,570,087
969,844
600,242
259,564
24,251
157,488
642,562
268,800
160,058
112,729
100,976
2015
9,714
303,780
313,494
17,039
833,868
28,618
1,193,019
1,526,208
1,029,280
496,928
336,781
20,804
134,075
554,610
251,499
133,099
101,246
68,766
350,180
191,899
158,281
204,430
1,193,019
2016E
9,714
317,985
327,699
16,933
847,739
29,111
1,221,482
1,762,402
1,090,463
671,939
213,781
20,804
134,075
524,656
214,030
142,687
99,173
68,766
343,774
185,493
158,281
180,882
1,221,482
2017E
9,714
370,059
379,773
16,908
847,739
29,951
1,274,371
1,957,202
1,159,918
797,284
120,781
20,804
134,075
561,723
233,095
155,397
104,465
68,766
360,297
202,016
158,281
201,426
1,274,371
334,114
171,162
162,952
317,957
1,019,013
321,675
183,200
138,475
288,000
1,109,058
330,797
197,774
133,023
249,541
1,097,297
383,912
229,129
154,783
258,650
1,300,195
20 May 2015
8

Tata Steel
Financials and valuations
Ratios (Consolidated)
Y/E March
Basic (INR)
EPS
Cash EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
Cash P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)
Return Ratios (%)
EBITDA Margins (%)
Net Profit Margins (%)
RoE
RoCE (pre-tax)
RoIC (pre-tax)
Working Capital Ratios
Asset Turnover (x)
Debtor (Days)
Inventory (Days)
Payables (Days)
Leverage Ratio (x)
Current Ratio
Interest Cover Ratio
Net Debt/Equity
E: MOSt Estimates
2010
(9.3)
26.7
95.7
8.0
(106.4)
2011
62.3
138.3
211.4
12.0
21.9
5.9
2.7
1.7
0.7
5.3
3.3
7.9
(0.8)
(7.2)
5.2
5.6
1.3
41.4
67
83.4
1.4
1.2
5.5
13.5
5.0
40.5
13.2
18.2
1.2
45.5
73.9
52.6
2.0
4.2
2.4
9.3
1.4
7.9
9.2
10.8
1.2
40.9
70.3
50.3
1.9
1.9
2.1
9.1
0.1
0.7
6.6
8.5
1.2
37.9
65.3
53.6
1.8
1.7
2.8
2012
18.6
97.4
260.2
12.0
74.6
2013
1.6
-18.4
217.3
8.0
886.5
2014
35.5
96.7
255.1
8.0
39.2
10.2
3.7
1.4
0.7
6.6
2.2
11.0
2.3
15.0
9.2
12.2
1.1
39.3
66.0
56.3
1.7
2.4
3.0
2015
2.9
82.8
184.7
8.0
486.8
126.4
4.4
2.0
0.8
8.5
2.2
9.2
0.2
1.3
6.1
8.3
1.2
34.8
65.8
50.2
1.6
1.4
4.1
2016E
26.6
90.8
199.3
8.0
56.7
13.6
4.0
1.8
0.8
7.4
2.2
11.3
2.0
13.8
7.7
10.7
1.1
40.0
60.0
52.0
1.5
1.9
3.9
2017E
63.7
136.5
252.9
8.0
23.6
5.7
2.6
1.4
0.8
5.3
2.2
14.6
4.4
28.2
11.6
14.4
1.1
40.0
60.0
52.0
1.6
3.0
3.0
Cash Flow Statement (Consolidated)
Y/E March
EBITDA
(Inc)/Dec in Wkg. Cap.
Tax Paid
CF from Op. Activity
(Inc)/Dec in FA + CWIP
(Pur)/Sale of Investments
Acquisition in subsidiaries
Int. & Divident Income
Other investing activities
CF from Inv. Activity
Equity raised/(repaid)
Debt raised/(repaid)
Dividend (incl. tax)
Interest & equiv. paid
CF from Fin. Activity
(Inc)/Dec in Cash
Add: opening Balance
Closing Balance
2010
80,427
46,465
-24,586
104,710
-71,495
25,016
-3,538
3,054
-46,964
24,465
-29,944
-13,209
-32,662
-51,350
6,396
61,482
67,878
2011
159,956
-71,749
-32,351
64,629
-104,160
17,505
-647
3,518
46,531
-37,254
45,568
37,874
-7,146
-31,366
44,930
72,305
67,878
140,183
2012
124,168
11,590
-36,524
112,838
-121,360
78,503
6,194
-11,343
-48,006
6,045
-39,803
-11,639
-37,646
-83,043
-18,212
140,183
121,972
2013
123,212
31,293
-25,690
133,239
-154,715
29,484
-1,557
3,576
-5,352
-128,564
2,646
25,153
-13,590
-34,657
-20,448
-15,772
121,972
106,200
2014
164,110
-12,696
-30,127
131,459
-164,201
-3,829
-1
3,519
29,436
-135,075
156
58,658
-9,244
-39,424
10,146
6,529
106,200
112,729
2015
127,758
3,520
3,510
110,517
-134,920
44,300
17,054
5,630
-11,601
-96,591
43,050
-11,520
-56,940
-25,410
-11,483
112,729
101,246
(INR Million)
2016E
147,712
21,475
149,357
-101,100
2017E
207,529
-15,252
158,890
-101,800
6,289
-94,811
6,022
-95,778
-9,302
-47,316
-56,618
-2,072
101,246
99,173
-9,302
-48,518
-57,820
5,292
99,173
104,465
20 May 2015
9

Tata Steel
Corporate profile
Company description
Tata Steel is the lowest cost steel producer in India.
Globally, it is the 12th largest steel company, with
24.1m tons of steel sales in FY13. It has operations
spread over Europe, the UK, Asia, North America
and rest of the world, with an annual capacity of
27m tons. On a consolidated level, it has ~22% raw
material security. Annual production is likely to
increase to 29-30m tons with the help of
Greenfield projects in Orissa.
Exhibit
13:
Sensex rebased
Exhibit 14: Shareholding pattern (%)
Mar-15
Promoter
DII
FII
Others
31.4
25.2
18.1
25.4
Dec-14
31.4
25.4
19.1
24.1
Mar-14
31.4
25.4
18.4
24.8
Exhibit 15: Top holders
Holder Name
Life Insurance Corporation Of India
National Insurance Company Ltd
The New India Assurance Company Limited
% Holding
14.6
1.1
1.1
Note: FII Includes depository receipts
Exhibit 16: Top management
Name
Cyrus P Mistry
Ratan N Tata
T V Narendran
Karl Ulrich Koehler
Koushik Chatterjee
Designation
Chairman
Chairman Emeritus
Managing Director
Managing Director & CEO
Executive Director & CFO
Exhibit 17: Directors
Name
Cyrus P Mistry
Ratan N Tata
T V Narendran
Karl Ulrich Koehler
O P Bhatt*
Andrew Robb*
D K Mehrotra*
*Independent
Name
Nusli N Wadia*
Ishaat Hussain
Subodh Bhargava*
Jacobus Schraven*
Mallika Srinivasan*
Koushik Chatterjee
Exhibit 18: Auditors
Name
Deloitte Haskins & Sells LLP
Shome & Banerjee
Type
Statutory
Cost Auditor
Exhibit 19: MOSL forecast v/s consensus
EPS
(INR)
FY16
FY17
MOSL
forecast
26.6
63.7
Consensus
forecast
33.3
42.3
Variation
(%)
-20.0
50.5
20 May 2015
10

Tata Steel
NOTES
20 May 2015
11

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