Tata Steel share price surged 8 per cent to a new 52-week high at Rs 1,188.65 apiece intraday on BSE after the company recorded its best-ever performance during the January-March quarter of FY21. The company on Wednesday reported a 250 per cent on-year rise in consolidated EBITDA to Rs 142 bn (its highest ever) on the back of higher steel prices. Tata Steel stock price surpassed its high of Rs 1,128.80 apiece, touched in the previous session. The stock has rallied nearly 12 per cent so far in May, while it surged 20 per cent in the previous month. On a year-to-date (YTD) basis, Tata Steel shares have soared 85 per cent from Rs 643.10 apiece. Analysts at CLSA remain bullish on the stock and have maintained a ‘buy’ rating to it.
With strong steel prices and EBITDA generation outlook, CLSA believes FY22 deleveraging is likely to be higher than the company’s guidance. “The outlook for steel prices, European profitability, and timeline for Kalinganagar expansion will be key from the call,” it added. Earlier this week, Tata Steel posted a consolidated profit of Rs 6,644.1 crore in fourth quarter of FY21 as compared to a loss of Rs 1,481.3 crore in the year-ago quarter. The company’s consolidated revenue from operations stood at Rs 49,977.4 crore, up by 38.8 per cent over Rs 36,009.4 crore in the corresponding quarter of the previous fiscal.
Around 23.61 lakh shares of Tata Steel exchanged hands on BSE, while a total of 4.74 crore stocks have traded on NSE so far in the session. Tata Steel stock has witnessed a spectacular rally, with prices gaining over 14% this week alone, on the back of a rally in global steel prices amidst a supply crunch, said Aamar Deo Singh, Head Advisory, Angel Broking. Singh told Financial Express Online that decarbonisation efforts in China are also fueling the up move in Tata Steel shares.
Those at Edelweiss Research see 10 per cent more upside in Tata Steel shares and have given a target price of Rs 1,300 apiece, post Q4 numbers. They said that favourable steel cycle and Europe in the sweet spot will complement the twin focus on growth and debt reduction. Further improvement in European spreads will be positive for Tata Steel stocks.
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