Morgan Stanley has kept overweight rating on the stock and raised the target price to Rs 1,630 from Rs 1,000.
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Tata Steel share price touched a 52-week high of Rs 1,146.60, rising 4 percent in early trade on May 7 after foreign broking houses raised the target price post announcement of March quarter earnings.
In the previous session, the share ended at Rs 1,100.55, up Rs 31.60, or 2.96 percent on the BSE after the company turned profitable in the quarter ended March 2021.
The company on May 5 posted a consolidated profit of Rs 6,644.1 crore for the quarter ended March 2021 compared to a loss of Rs 1,481.3 crore in the year-ago quarter.
Consolidated revenue from operations stood at Rs 49,977.4 crore, up 38.8 percent YoY.
TV Narendran, Managing Director, told Moneycontrol that cement demand has seen a sharp decline during lockdown due to slowing construction activity. Construction activity is impacted by two aspects, migrant workers and bottleneck in fabrication sector due to the restriction of liquid oxygen, he said.
When asked on the overall impact on economic activity, he said, “Seeing some signs of activity slowing down not very material yet. Demand may be impacted but supply won’t. If domestic markets slowdown, the international markets are strong and those options are available for Indian steel producers.”
Here is what brokerages have to say about the stock and company after the March earnings:
Morgan Stanley | Rating: Overweight | Target: Raised to Rs 1,630 from Rs 1,000
The brokerage sees the current steel cycle remaining higher for longer. The company needs to have disciplined capital allocation & a strong focus on de-leveraging. The structural repair of balancesheet will improve its resilience in any downcycle.
Citi | Rating: Buy | Target: Raised to Rs 1,375 from Rs 1,200
There was a resilient demand in both China & overseas. The steel prices will likely go higher for longer. Citi raised the FY22-23 EBIDTA estimate by 13%/12%.
Jefferies | Rating: Buy | Target: Raised to Rs 1,500 from Rs 1,150
Broking house upgrades FY22-23 EBITDA estimates by 28-48% & EPS by 51-81%. The stock continues to trade at a reasonable valuation.
JPMorgan | Rating: Overweight | Target: Raised to Rs 1,425 from Rs 1,250
There was a positive commentary on prices, margins, capex & debt. The brokerage increased FY22E/23 adjusted EBITDA by 28%/5%. It is a case for re-rating with net debt by FY23 should be nearly half of FY21.
Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities
The strong uptrend wave after breakout clearly indicates that bulls are in full control and may take Tata Steel to Rs 1230 level.
On the daily and weekly charts, the stock has formed a breakout continuation formation which is grossly positive but, intraday charts, and the momentum indicators indicate the stock is in an overbought zone and high chances of quick a short-term price correction cannot be ruled out if stock trading below Rs 1035.
For the next few trading sessions, Rs 1035 should be the trend decider level for the swing traders. If it sustains above the said levels, we can expect a continuation of the uptrend up to Rs 1200-1230.
At 09:23 hrs, Tata Steel was quoting at Rs 1,131.25, up Rs 30.70, or 2.79 percent on the BSE.
Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
