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  1. Tata Steel shares zoom 3% on stellar Q1 show as profit doubles, should you buy or sell stock?

Tata Steel shares zoom 3% on stellar Q1 show as profit doubles, should you buy or sell stock?

Shares of India’s steel giant Tata Steel rose by as much as 3.2% after the company’s net profit more than doubled in the latest quarter. We take a look at what brokerages have to say.

By: | Updated: August 14, 2018 11:01 AM
Notably, the Tata Group major reported a 113% on-year jump in consolidated net profit to Rs 1,954 crore for April-June.

Shares of India’s steel giant Tata Steel rose by as much as 3.2% after the company’s net profit more than doubled in the latest quarter. Notably, the Tata Group major reported a 113% on-year jump in consolidated net profit to Rs 1,954 crore for April-June. In the comparable period previous quarter, the firm had earned a profit of Rs 918.40 crore. The growth in earnings was mainly backed by increase in sales growth in the automotive and industrial sectors, which had better operating efficiencies.

India’s biggest private-sector steel producer reported a 13.8% on-year rise in revenues to ₹16,405 crore, while EBITDA for the quarter jumped by 75.2% to ₹5,118 crore. Taking stock of the reported results, most brokerages have retained their bullishness on the stock.

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Global firm Jefferies has raised the share price target to Rs 602 from Rs 586 earlier. Jefferies has a ‘hold’ rating on strong Q1, and said that adjusted India EBITDA came in slightly better than expected. Further, the firm noted that Tata Steel Europe margins surprised positively.

Apart from Jefferies, research firm Investec has also raised share price target to Rs 730 from Rs 720. The firm has maintained a ‘buy’ rating given strong results; and says that the “watertight” joint venture with Thyssenkrupp and walking away from Bhushan Power are key positives. Tata Steel shares hit an intraday high of Rs 587. Investec’s target price implies an upside of more than 24.3% from the current price levels.

Citigroup has also raised the target price to Rs 765 from Rs 750 earlier, while at the same time maintaining a ‘buy’ rating. Citi expects steel spreads to sustain with strong steel demand and continued capacity constraints in China. According to a Reuters report, twenty-two of 26 brokerages have rate the stock “buy” or higher, while three have given a “hold” and one firm has a “sell” or lower. The median price target was seen at Rs 748.50.

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