Shares of Tata Steel Ltd. gained as much as 5.1 percent to Rs 479.95, the biggest intraday jump since November, after the Indian steelmaker said it has struck a deal to solve its long-running U.K. pension standoff.
The resolution brings the Tata group company a step closer to a possible joint venture with Thyssenkrupp AG for its European operations.
While most brokerages maintained their rating on the stock despite the company reporting a surprise loss of Rs 1,168 crore in the January-March quarter, they revised their price target upwards on higher volume and margin guidance.
Here's what brokerages said about Tata Steel post earnings:
- Rating: Hold
- Price Target: Rs 513 per share
- Domestic steel demand remains a cause of concern as volatile coking coal prices weigh on steel spreads in India and Europe.
- Tata Steel U.K. has offered to plough 550 million euros into its now-closed pension scheme. It will also give the fund a 33 percent stake in its U.K. business, which is likely to impact sentiment in the medium to short term.
- See Tata Steel’s domestic enterprise value (EV) by its earnings before interest, taxes, depreciation and amortization (EBITDA) for FY19 at 7 times and at 6.5 times for its overseas subsidiaries.
- Rating: Sell
- Price Target: Upgraded to Rs 451 from Rs 440
- Believes that earnings momentum may moderate from current levels.
- Better-than expected momentum in FAMD (ferro alloys and minerals division) business in current quarter is a positive.
- Tata Steel's proposed deal with British Pension Scheme a ‘negative’ surprise.
- Rating: Sell
- Price Target: Upgraded to Rs 300 from Rs 275
- Maintain sell citing structurally muted outlook for global steel prices.
- Revised India volume estimates higher by 4 percent for FY18.
- Increase in coking coal prices to weigh on Tata Steel U.K.