The share price of Tata Steel gained on Friday after the company reported its June quarter earnings. The steel major posted a consolidated net profit of Rs 9,768.34 crore for the first quarter of fiscal 2022. It had reported a net loss of Rs 4,648.13 crore in the year-ago period.

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The company's revenue in Q1Y22 jumped to Rs 53,534.04 crore from Rs 25,662.43 crore a year ago.

Global brokerage firm CLSA said that Tata Steel’s Q1 adjusted consolidated EBITDA was in line with a better domestic business offsetting weaker EU profitability, while disappointment was largely on a higher QoQ cost increase.

The standalone profitability continued to surprise, at 12 percent above estimates, CLSA said, adding that the impact on free cash flow due to working capital increase could be transient.

The brokerage maintained a Buy rating with a target price of Rs 1,750 per share.

JPMorgan has an Overweight call on the stock and raised the target price to Rs 1,810 per share from Rs 1,610 earlier as the company posted the highest-ever EBITDA and PAT in a quarter where volume was impacted from the second wave of COVID-19.

Its debt declined further on a sequential basis even after a substantial working capital build in Q1. "While we increase estimates, they imply over 45 percent decline in spot EBITDA/t in FY23," JPMorgan said.

ICICI Securities said that Tata Steel’s consolidated EBITDA was below its estimates, while the major miss is Europe.

“With steel prices yet to show meaningful correction, Q1FY22 was a missed deleveraging opportunity. Management has guided for significantly lower net debt by FY22E end. A sharp reduction in iron ore prices, is increasing the profitability of Chinese players in a weakening demand environment. Chinese production cuts may allow some support to the steel prices, but may not arrest its decline,” ICICI Securities said.

ICICI Securities maintains Hold and raises the target to Rs 1,365 per share from Rs 1,108 earlier.

At 10:15 am, the shares of Tata Steel were trading 0.77 percent higher at Rs 1,446.10 apiece on the BSE.

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