Shares of Tata Steel soared 3 per cent as the metal index gained momentum following China’s plans to restructure the steel industry through output cuts.
Tata Steel shares closed 2.87 per cent positive on the BSE at ₹150.35. On the NSE, the stock ended at ₹149.74, up 2.49 per cent.
Nifty metal settled with a 2.34 per cent gain at 8,888.65, after hitting an intraday high of 8,947.25. Other major gainers include Jindal Stainless, Jindal Steel & Power, Hindustan Zinc, Welspun Corp and JSW Steel.
Brokerages have turned positive on the Indian steel industry given the rising industrial demand and strong government support for infrastructure creation.
HDFC Securities domestic has initiated coverage on the sector stating the outlook bodes well for Indian steel manufacturers, with expanding capacities and increasing value-added production to capitalise on the large opportunities. The brokerage has assigned a buy rating on Tata Steel at a target price of ₹155.
HDFC Securities emphasised the company’s Kalinganagar (TSK) Phase-2 ramp-up to drive volume growth and VAP sales share expansion.
Analysts expect the return ratio to rebound on margin recovery, the rising contribution of high-margin India operations, and turnaround of UK operations. “We estimate RoCE to expand to over 13 per cent in FY27E as against 7 per cent in FY24. Despite factoring in capex for both the India and Europe operations, we estimate its net debt to EBITDA ratio to moderate to 2.2x in FY27E versus 3.5x in FY24,” they added.
Meanwhile, a report by Anand Rathi Research said JSW Steel, Tata Steel, SAIL, Jindal Steel and ArcelorMittal Nippon Steel India are expected to relish a 67 per cent cumulative market share by FY30-31. Capacity addition is expected to catapult JSW Steel and Tata Steel to the top seven global manufacturers, it said.
In addition, Tata Steel surpassed Trent to become the fourth largest Tata group stock with a market capitalisation of ₹1.87 lakh crore. The stock has rallied over 20 per cent on January’s low.