Tata Steel share hits 52-week high after Moody’s changes outlook to stable

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Tata Steel share hit a fresh 52-week high today extending gains for the fifth consecutive session amid a slew of upgrades from foreign brokerages.

The large cap stock touched an intraday high of Rs 868.65, rising 6.98% against previous close on BSE. The stock gained 22.67% in the last five days. Tata Steel share stands higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages.

The stock has gained 223% in one year and risen 34% since the beginning of this year. Market cap of the firm rose to Rs 98,659 crore on BSE.

Moody’s has become the latest brokerage to turn positive toward the stock citing a rise in steel demand and prices. It has changed its outlook for Tata Steel to stable from negative. Tata Steel is one of the country’s top steel producers with an installed capacity of 20.6 million tonne per annum (MTPA). Moody’s forecasts a long-term sustainable EBITDA/tonne of Rs 13,200 for fiscal 2022 for Tata Steel, constituting a 30 per cent gap compared to the December quarter. The company, therefore, has a substantial buffer especially given the benign operating environment, the brokerage said.

On Tuesday, CLSA maintained buy call on the stock with a target price of Rs 950. CLSA said after the significant outperformance of steel stocks over the past year, the brokerage saw further upside as risk-reward remains favourable.

“We expect upward revisions in consensus as current estimates imply a Rs 10,000-12,000/tonne correction in steel prices versus spot. With domestic prices trading at a 10 per cent discount to import parity, we believe such sharp correction is unlikely unless demand drops sharply,” CLSA said in a note.