Tata Steel's good India Q4 upbeats the street's mood; all eyes now on UK biz

| Thursday, May 26, 2016 - 13:17
First Published |
Tata Steel's good India Q4 upbeats the street's mood; all eyes now on UK biz

Tata Steel's good India Q4 upbeats the street

New Delhi: Tata Steel’s Q4 results are making the investors confident that the rest of Tata Steel’s business is in better shape. However, Investors are demanding a quick sale or its European business as it continues to pull down the company’s consolidated performance.
The company is attempting to sell its money-losing unit in UK as it has been struggling in Europe, particularly in the UK due to the high production cost and cheap steel exports from China that has eroded bulk of its profits.
Tata Steel’s latest results show that the company’s accounts in India are in good shape and it has been able to prune down its losses in Europe. However, if the recent softening of iron ore and steel prices accelerate, it could wipe out the gains seen in recent months.
Tata Steel Europe incurred a loss of Rs.357 crore at the Ebitda (earnings before interest, tax, depreciation and amortization) level, lower than the preceding quarter’s Rs.675 crore loss. This should continue to improve as its new contracts get priced at current rates. 
Even now, selling loss-making or less profitable assets will make the European business more valuable. In the near term, the management expects the full impact of higher steel prices to result in better realisations in the current quarter.

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