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This Tata Group stock gave 180% returns in 9 months; should you subscribe?

Tata Steel share price soared 180 per cent from its 52-week low of Rs 250.90 touched on March 30, 2020 to Rs 699.45 as of now, while it gained 14 per cent over the last one month   

Chitranjan Kumar | January 4, 2021 | Updated 18:59 IST
This Tata Group stock gave 180% returns in 9 months; should you subscribe?
Tata Steel shares hit 52-week high of Rs 699.45 on Monday

Shares of Tata Steel rallied nearly 9 per cent in intraday trade to Rs 699.45 on the Bombay Stock Exchange on Monday after the steel major said it transferred its stake in two companies to Tata Steel Downstream Products Ltd (TSDPL), a wholly- owned subsidiary of the firm, as part of reorganising its India footprint. The shares of Tata Group company have soared 180 per cent from its 52-week low of Rs 250.90 as on March 30, 2020, while it gained 14 per cent over the last one month.    

Earlier today, Tata Steel share price opened marginally higher at Rs 646.55 against the previous closing price of Rs 643.10 on the BSE. During the day's trade, the stock hit 52-week high of Rs 699.45, before settling at Rs 692.75, up 7.72 per cent. The market cap of the large cap stock increased to Rs 79,382.18 crore.  Meanwhile, the BSE benchmark SENSEX ended at 48,176, up 307 points or 0.64 per cent.   

On the volume front, there was surge in buying as 17.88 lakh shares changed hands over the counter as compared to two-week average volume of 5.88 shares on the BSE.  

In an exchange filing on Friday, the country's largest steel maker said it transferred the 51 per cent stake it holds in Jamshedpur Continuous Annealing and Processing Company Private Ltd (JCAPCPL) and 50 per cent stake it holds in Tata BlueScope Steel Private Ltd (TBSPL) to TSDPL. As on March 31, 2020, the net worth of JCAPCPL stood at Rs 428.60 crore, while that of TBSPL was Rs 469.97 crore.

Also Read: Tata Steel Q2 results: Profit declines 59.5% to Rs 1,635 crore; net debt reduces by Rs 8,197 crore

The company said that the decision was taken to reorganise the company's India footprint into four clusters to drive scale, synergies and simplification and to create value for all stakeholders. Besides, it will help consolidate its downstream steel processing services.

TSDPL was created to bring steel service centre solutions for the first time to industrial customers. It was originally established in 1997 as Tata Ryerson Ltd, a joint venture between Tata Steel of India and Ryerson Inc. of the US. Later in 2009, Tata Steel acquired the entire equity stake of Ryerson Inc.

Also Read: Cap on steel prices not needed in an open economy: JSPL

Last month, S&P Global Ratings had revised outlook for Tata Steel to stable and affirmed 'B+' rating on hopes that the company's earnings would strengthen over the next 12-18 months, following a rebound in the second quarter of fiscal 2021, helped by a benign steel price environment and lower input costs.

Tata Steel reported 59.55 per cent year-on-year decline in its consolidated net profit at Rs 1,635 crore for the second quarter ended September 30, 2020, as against consolidated net profit of Rs 4,043 crore in the year ago period and net loss of Rs 4,609 crore in June quarter of the current fiscal. Consolidated revenue of the Tata Group company, however, rose by 59.69 per cent to Rs 37,154 crore in Q2 FY21 from Rs 34,579 crore in Q2 FY20. On the operational front, consolidated EBITDA surged 10.4 times QoQ and 60 per cent YoY to Rs 6,217 crore.


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