Tata Steel, one of India’s top steel companies, saw its stock price rise on Thursday after JP Morgan, a global investment firm, raised its target price for the stock. Investors are showing increased interest in Tata Steel, and the company’s European operations are expected to improve significantly in the coming years.
Tata Steel Stock Performance
- The stock rose 1.54% on Thursday’s trading session.
- At 9:25 AM, it was trading at ₹152.85 per share on the NSE.
- Over the past month, Tata Steel shares have gained 11.23%.
JP Morgan’s New Target Price
JP Morgan has now set a new target price of ₹180 for Tata Steel, suggesting a possible 20% upside from its current levels. The firm remains positive on the stock and believes it has more potential for growth.
Why is Tata Steel’s Stock Rising?
JP Morgan has identified several factors that could boost Tata Steel’s earnings, particularly in its European operations:
1. Increase in European Steel Prices
- Steel spreads in Europe have risen 18% quarter-on-quarter.
- On a spot basis, they are up by 60% compared to Q3.
- This could significantly improve Tata Steel’s profits.
2. Germany’s Infrastructure Fund
Germany recently announced a new infrastructure fund, which could boost demand for steel. However, not all investors have fully realized its potential benefits yet.
3. European Business Expected to Turn Profitable
JP Morgan expects Tata Steel’s European operations to reach EBITDA breakeven by FY26. This means the company could stop making losses in Europe and start generating profits.
4. Higher Earnings Forecasts
Due to these positive developments, JP Morgan has revised its EBITDA per tonne (EBITDA/t) estimates:
- FY26: $68 per tonne (previous estimate: $19).
- FY27: $70 per tonne (previous estimate: $27).
With this, Tata Steel’s overall EBITDA projections for FY26 and FY27 have increased by 8-11%.
Tata Steel’s Market Position
- Tata Steel’s market capitalization is now around ₹2 lakh crore.
- It makes up 6.9% of the total market value of the Tata Group.
- It is one of only three Tata stocks delivering positive returns in 2024.
How Does Tata Steel Compare to Other Tata Stocks?
Along with Tata Steel, two other Tata Group stocks have performed well this year:
- Benares Hotels – Up 47% in 2024.
- Tata Consumer Products – Gained 4% this year.
Should You Invest in Tata Steel?
Tata Steel looks like a promising investment due to:
- Rising steel prices in Europe.
- Positive infrastructure investments.
- Strong market position within the Tata Group.
Potential Risks
However, there are some risks to consider:
- Global economic uncertainty could affect steel demand.
- Strict environmental regulations in Europe might impact operations.
- Raw material price fluctuations (iron ore, coking coal) could affect profit margins.
Final Thoughts
JP Morgan’s new target price of ₹180 suggests a 20% upside, making Tata Steel an interesting stock to watch. While the company’s future looks promising, investors should also consider potential risks before making any decisions.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investing in the stock market carries risks, and investors should conduct their own research or consult a financial expert before making investment decisions.
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