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Tata Steel shares witnessed an increase of over a percent on May 31st, following the release of its Q4 results and subsequent analysis by brokerage firms. The company reported a 64.59% decline in its net profit for the January-March quarter of 2023-24, attributed to lower realisations and exceptional items. Despite the decline in net profit, brokerage firm Morgan Stanley raised its target price on Tata Steel shares to ₹145, indicating an anticipated upside of 11% from the closing price on May 30th.
The brokerage's decision was based on management guidance suggesting an improvement in spreads across businesses in Q1FY25. Additionally, the closure of heavy-end assets in the UK and the ramping up of the Kalinganagar unit's capacity in H2FY25 were cited as positive factors. However, Jefferies maintained a buy call on the stock with a higher target price of ₹195, implying a potential upside of 18%. The brokerage highlighted India's volume growth prospects and anticipated benefits from lower coking coal prices.
The positive outlook from brokerage firms aligns with Tata Steel's plans to accelerate decarbonisation efforts in Britain, as reported by Reuters on May 30th. The company's CEO, TV Narendran, emphasised the need to move swiftly in building a new electric arc furnace, underscoring Tata Steel's commitment to sustainability. Overall, the recent developments suggest a positive outlook for Tata Steel, supported by expectations of improved spreads, capacity expansion, and a focus on decarbonisation initiatives.
Source: Morgan Stanley raises target price on Tata Steel shares but it’s still below current price