Tata Steel Share Price: Tata Steel, the steel company of the Tata Group, is witnessing a recovery from the lower levels. The stock has jumped nearly 7 percent from its record low of June 23, 2022. However, the stock is currently trading at a discount of about 43 per cent from its record high. This is due to volatility in commodity prices due to geopolitical tensions seen in metal stocks. While steel prices India Rapidly corrected to 60- 61k/t, domestic demand has also improved sharply as consumer de-stocking is behind us. Analysts at JP Morgan do not see further downside in the domestic steel market. With a target price of Rs 1400, the foreign brokerage firm has an ‘overweight’ stance on the stock, which means an increase of over 58 per cent from the current market price.
“Overall Tata Steel remains committed to a ~$1 billion net debt reduction, and if underlying earnings remain at current levels, we see an upward risk to this number. Due to working capital releases and higher underlying earnings, we see an upside risk to this number.” With the combination, Tata Steel should deliver another year of material net debt reduction,” the note said.
While markets are likely to fear an immediate slowdown, JP Morgan believes that the steel market too faces a series of outright issues (export taxes, fall in China’s demand over COVID-19, rain in China). doing, which should be reduced.
“Tata Steel’s Europe footprint has declined materially, and India should continue to grow. Strong volumes with better balance sheet from Tata’s 5MT KPO expansion, large captive iron ore mining ramp-up and new brownfield expansion pipeline Visibility is available.
However, major downside risks to its rating and price target include a sharp fall in steel spreads and a sharp fall in steel demand in India, the brokerage said.
“While Tata has attractive development alternatives across multiple sites in India (NINL, KPO, Merandalli), we believe that the major constraint for Tata (and large Indian resource companies) is not capital, but putting it on the ground. How to deploy aggressively. Large projects are difficult to execute on time given the labor mobilization and contractor issues. Tata’s 5MT KPO should be commissioned in 2HFY24, and thereafter we would expect Tata to start work on the next expansion,” the note from JP Morgan said.
Elsewhere, Moody’s Investors Service has changed the outlook for Tata Steel from stable to positive. The outlook change in positive reflects the domestic steel giant’s track record of delivering a solid operating performance while maintaining conservative financial policies and is likely to build upward pressure over the next 12 months if recent performance and credit metrics continue to improve. Is.
“Tata Steel’s well-planned capital allocation policy, which prioritizes debt reduction over capital expenditure and fresh investments, underscores our positive outlook,” said Kaustubh Chaubal, Senior Vice President, Moody’s.
Chaubal said the large debt reduction achieved in the last two years, as well as the shortfall in the remaining period of FY23, will significantly improve the company’s financial resilience and resilience and earn it a place for investment-grade ratings.
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