Fw: FPO Note: Tata Steel – Subscribe

India Infoline Research Tata Steel – Subscribe Price band Rs594-610   Tata Steel is among our top picks in the metals space. The company is issuing 57mn shares (6.3% dilution) at the price band of Rs594-610, effectively raising Rs34.8bn at the upper band. Tata Steel plans to utilize the issue proceeds for its Jamshedpur plant expansion, debt repayment and investments in international raw material projects.      We believe domestic operations would continue to be the earnings driver for Tata Steel over the next two years. Even though near term earnings in Corus would remain under pressure, we expect Corus to deliver an EBIDTA/ton of US$52 in FY12 and US$63/ton in FY13. We expect Tata Steel to report strong earnings in FY13 due to 1) full impact of new 2.9mtpa capacity 2) volume growth in European operations 3) benefits from overseas raw material projects. At the upper band of Rs610, Tata Steel would trade at 8.2x P/E and 5.9x EV/EBIDTA on FY12E, which is at a discount to its peers. We value the company on a SOTP basis and recommend 'Subscribe' to the issue with a fair value of Rs740.   Please Click here to view the attachment..     Warm Regards,   India Infoline Research Team