Tata Steel – Macquarie Research

Tata Steel’s margin expands on rising raw material prices due to its fully-integrated nature compensating for Corus, while later takes care during falling raw material prices.

Refinancing of bridge loans utilised for acquiring Corus is now firmly put in place. Rights issue and convertible preference shares offer open up later this month, while a big part of the debt US$2.5bn has been sourced locally from State Bank of India to avoid turmoil in the international market following sub prime issue. Tata Steel’s 1.8mtpa expansion is on schedule for completion in early 2008. The green field project in Orissa has reached an advanced stage and will commence construction shortly.

EPS estimates for FY3/09 and FY3/10 by -4% and -1% to Rs99.9 and Rs117.7 respectively. Increased target price from Rs800 to Rs1,000 (ex rights and converts).

Also read our coverage on Gujarat NRE Coke and JSW Steel.