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Reliance Securities has come out with a research report on Tata Steel. The research firm has reiterated recommendation of buy with a 12-month price target of Rs 617.

“Tata Steel management sounded confident of posting better results of second half FY10. Reasons put forth by the management seemed to be plausible. They were a) Teesside Cast Product (TCP) had an adverse impact of $220 out of the $1022 loss posted in H1 which are not expected to be repeated in H2, b) Tata Steel (UK) operations were already EBIDTA positive in Oct. ’10, c) Engg. Steel business is expected to do better with related sectors exhibiting positive signals, d) Effect of revised raw material prices will be evident from Q310 onwards”, says Reliance Securities.

The report also says, “We have revised the estimates for Tata Steel (Con.). Although we expect the consolidated entity to post better H210, it will be difficult for the company to remain in black for the FY10. But the company is expected to demonstrate resilience in its FY11 results. Although, we have revised the FY11 estimates downwards by 14.4% at EPS level we reiterate our earlier recommendation of buy with a 12 month price target of Rs 617 at which the scrip will quote at an EV/EBIDTA of 5x for FY11E earnings.”