Raw Material purchases impact EBITDA: Tata Steels standalone revenues for 2QFY2016 declined 12% yoy to Rs9,531cr (7% ahead of our estimate of Rs8,879cr), led by better than expected volumes and pricing. However, increased raw material expenses on account of external purchases of iron ore resulted in the EBITDA declining sharply by 40% yoy to Rs1,862cr, 3% below our expectation of Rs1,918cr. The adjusted net profit nearly doubled to Rs3,844cr led by a sharp jump in other income on account of gains from sale of quoted investments of Rs3,505cr, while interest expenses were lower on account of debt repayments in 1QFY2015. Overseas operations remain under pressure: The EBITDA of the European operations turned negative, led by a steep decline in realisations and on account of lower volumes. Tata Steel Europe (TSE)s sales volumes declined 3% yoy to 3.27MT, 7% below our expectation of 3.53MT. Realisation declined 20% yoy to $798/tonne, but 10% ahead of our estimate of $723/tonne. SEA volumes continued to remain under pressure, with deliveries declining 27% yoy to 0.69MT. Outlook and valuation: Given the weak outlook on steel prices and with the European business already in the red at the operating level, we expect tough times to continue...