Tata Steel share rises 2% following credit rating upgrade

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Tata Steel Limited (TSL) share rose 2.4% to an intraday high of Rs 1,218.45 on BSE after rating agency CARE Ratings raised the long-term credit rating of the company to ‘CARE AA +’ with a stable outlook to ‘CARE AA’ with a negative outlook.

“The review of the rating and outlook assigned to instruments of Tata Steel Limited (TSL) takes into account the performance improvement observed in FY21, sequentially from Q2 and FY21, in particularly in Indian operations, thanks to the recovery in demand and the increase in steel prices leading to a substantial cash flow generation and significant deleveraging at the end of fiscal year 21, resulting in an improvement debt coverage indicators, ”the rating agency said.

The stock has gained 251 percent in the past year and is up 88 percent since the start of this year. It opened 0.19% more at Rs 1,192.00 against the previous close of Rs 1,189.75 on BSE.

With a market cap of Rs 1,45,402 crore, the share of most of steel is above the 5-day, 10-day and 20-day, 50-day 100-day and 200-day moving averages.

“TSL’s European operations as well, while recording operating losses for the full FY21, saw improved profitability in Q4-FY21, largely driven by prices in the FY21. Significantly higher steel and lower coking coal prices, which more than offset the sharp increase. iron ore prices, ”noted CARE.

“Given the current price trend in Europe, European operations are also expected to report operating profit in the near future. However, the risk emanating from the downside risk in the event of an unfavorable movement in steel and commodity prices for European operations continues to exist. The rating continues to reflect TSL’s established track record as one of India’s largest integrated steelmaking companies with an enriching product portfolio, significant captive raw material security and a global presence aided by geographically diversified production facilities, ”he added.

CARE Ratings said there were numerous price increases between Q2 and FY21, resulting in improved sales achievement per tonne, resulting in improved EBITDA per tonne. Higher steel prices led to improved achievements in all geographies and improved operating EBITDA per tonne primarily in the second half of FY21.

He further added that Indian operations continued to perform well with increased steel prices, lower coking coal prices and insulation against increased iron ore prices due to mines. captives. European operations continued to record operating losses for the second year in a row, although they posted operating profit in Q4-FY21.

In quarterly terms, Tata Steel reported a stand-alone net profit of Rs 6,593.54 crore in Q4 FY21, compared to a loss of Rs 436.83 crore in Q4 FY20. The company recorded its highest quarterly crude steel production on record at 4.75 million tonnes in the quarter, while steel deliveries reached 4.67 million tonnes.


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