Tata Steel has been a key beneficiary of rising steel prices. While margin in India has been strong in the last few quarters, Europe should see a sharp jump, with EBITDA/t expected to cross USD250/t by 3QFY22. The deleveraging cycle should continue, with consolidated net debt expected to fall by 32% YoY to Rs 565 billion (0.8x EBITDA) in FY22.Consolidated EBITDA rose 14% QoQ to Rs 161.1 billion (highest ever) in 1QFY22. PAT at Rs 90.9 billion was higher than FY21 levels (Rs 82.7 billion).

Commenting on the result review, Motilal Oswal Institutional Equities said, "We arrive at our TP of Rs 1,565/share, based on FY23E EV/EBITDA of 5x/4x for its India/Europe operations. Our TP implies an EV/capacity of USD1,064/t, a premium of ~50% to its past five-year average of ~USD700/t, which prices in deleveraging from the up cycle. We, therefore, rate it Neutral." 

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