The share price of Tata Steel jumped over 7 percent on Tuesday to hit a 52-week high of Rs 529.50 as brokerages maintained bullish view on the stock after the company reported its September quarter earnings.
Tata Steel reported a 59.6 percent year-on-year (YoY) fall in Q2FY21 profit at Rs 1,635.4 crore, against Rs 4,043.5 crore in the corresponding quarter a year ago. Total revenue from operations, however, rose 7.4 percent to Rs 37,154 crore from Rs 34,759 crore, YoY.
Operational performance during the quarter improved as EBITDA increased 59.7 percent to Rs 6,217 crore from Rs 3,893 crore and EBITDA margin expanded to 16.7 percent from 11.3 percent, YoY.
The company has initiated discussions with Sweden-based SSAB on the potential sale of Tata Steel Netherland business, including Ijmuiden steelworks. It has also initiated the process to separate Tata Steel Netherlands and Tata Steel UK and will pursue separate strategic paths for the Netherlands and the UK businesses in the future.
Brokerages have maintained their bullish view on the stock with certain houses raising their target price.
Morgan Stanley is 'overweight' and has raised the target price to Rs 690 per share from Rs 565 earlier. It also raised FY21-23 EBITDA estimates by 8-23 percent.
Morgan Stanley is of the view that the potential sale of Netherlands operations could help improve the balance sheet and give the flexibility to pursue growth capex in India. The management has been exceeding commitments with respect to deleveraging, it noted.
Jefferies retained the 'buy' call and has raised the target to Rs 680 from Rs 485 earlier while BofAML reiterated 'buy' and raised the target to Rs 670 from Rs 510.
JPMorgan has remained 'overweight' and raised the target to Rs 690 from Rs 580.
Edelweiss Securities retained a 'buy' and raised the target to Rs 565. Edelweiss Securities believes that the H2 will look much better due to higher spreads & better product mix.
At 11:50 am, the shares of Tata Steel were trading 6.77 percent higher at Rs 525.40 on the BSE as against a 0.36 percent gain in the benchmark Sensex.
First Published: IST