Nearly 450% rally in 17 months: Analysts see over 20% upside in this Nifty stock post Q1 results

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Analysts on Dalal Street see up to 25% upside in Tata Steel after the company last week posted a consolidated net profit of Rs 9,768.34 crore for June quarter 2021-22. It had reported a loss of Rs 4,648.13 crore in the same period last year. Total income zoomed to Rs 53,534.04 crore during the quarter under review from Rs 25,662.43 crore a year ago. Expenses were at Rs 41,397.23 crore as against Rs 29,116.37 crore in April-June a year ago.

Shares of the company have been already buzzing in the domestic equity market due to their superlative performance since the lows of March 2020. The scrip has climbed 447% to Rs 1487 on August 13 from Rs 271.75 on March 24 last year.

What’s next?

Brokerage Investec is positive on Tata Steel with a target price of Rs 1,850. “Management’s commentary is upbeat, expecting ‘strong/resilient’ pricing in India/Europe on back of demand/supply tightness and range-bound coking coal. Management reiterates a progressive dividend payout policy, medium-term RoIC (return on invested capital) and net debt/EBITDA at 15% and 2 times, respectively. We reiterate ‘Buy’ and highlight Tata Steel as our preferred ferrous proxy,” it said.

According to reports, Tata Steel has also outlaid a capital expenditure of Rs 3,000 crore for its European operations as its focus is to make the business “stronger”.

On the other hand, Motilal Oswal Financial Services has a ‘Neutral’ call on Tata Steel with a target price of Rs 1,565. It believes that Tata Steel has been a key beneficiary of rising steel prices. While margin in India has been strong in the last few quarters, Europe should see a sharp jump, with EBITDA/t expected to cross $250/t by Q3FY22. The deleveraging cycle should continue, with consolidated net debt expected to fall by 32% YoY to Rs 56,500 crore in FY22.