Shares of Tata Steel Ltd. rose to the highest in more than a year after analysts raised their price targets on the steelmaker, citing a scope for deleveraging on a potential sale of its Netherlands business, improved profitability and continued recovery in domestic demand.
India’s oldest steelmaker said it’s in talks with Swedish steelmaker SSAB AB to sell its Netherlands unit and reduce the burden from its cash-draining European operations. Negotiations are ongoing for the IJmuiden steel mill and related downstream assets, Tata Steel said in a statement releasing its quarterly results.
The Tata Group firm also said that it will reorganise its India business and simplify the group structure by clubbing listed and unlisted subsidiaries into four clusters. The business clusters will be long products, downstream, mining, and utilities and infrastructure, it said in the statement.
The company reported a 60% year-on-year rise in operating profit for the July-September period, while margin expanded more than 500 basis points to 16.4%. Its consolidated net profit, however, tanked 62.7% over the year-earlier to Rs 1,546.3 crore on account of losses at overseas subsidiaries.
Still, that didn’t deter analysts from maintaining their bullish investment recommendation for the steelmaker. Of the 29 analysts tracking Tata Steel, 21 have ‘buy’ ratings, five suggest a ‘hold’ and the rest rate ‘sell’.
Shares of Tata Steel rose as much as 5.3% to Rs 518.4 apiece—the highest since May 2019. The stock is also up for the third straight day.
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