Tata Steel slips after announcing $1.6 billion goodwill impairment charge

14 May, 2013,MUMBAI:-



Shares of Tata Steel BSE -0.79 % drifted lower in the red on Tuesday after it announced it will write off goodwill and will impair assets worth $1.6 billion during FY 2013 for the loss of value of Tata Steel Europe (TSE), formerly Corus, and other overseas assets in Thailand and South Africa.



At 09:20 a.m., the stock was at Rs 297.90, down 2.44 per cent, on the BSE. It touched a high of Rs 303.50 and a low of Rs 297.60 in trade today.



According to analysts, the asset write off for Corus is not surprising. The company may now start looking at selling overseas assets. However, they don\'t see any significant changes in price target or recommendation.



With goodwill write off, most negatives have been factored in and the stock will be a good buy at levels below Rs 295-300, they say.



\"The company does not expect any major impact on financial covenants due to this write off. In our view, taking goodwill write off is justified as its European operations continue to make losses and we do not foresee a financial turnaround at its European operations over the coming few years,\" said an Angel Broking note.



\"Although goodwill write off would affect its FY2013 financial performance, there will be no impact on its cash flows. Hence, we maintain our estimates until Tata Steel reports its 4QFY2013 results and maintain our Buy rating on the stock with a target price of Rs 430,\" said Angel Broking note.


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