The Tata Steel share price rose in early trade today after Moody's Investors Service upgraded the corporate's family rating, reflecting the sustained improvement in the company's credit profile. The Tata Steel share price rose 1.28% to 496.90 compared to the previous close of 490.60 on the BSE. Tata Steel share price has risen 5.64% in the last three days.
Tata Steel share price has fallen 23.19% during the last one year and lost 5.72% since the beginning of this year. 22 of 38 brokerages rate the stock "buy" or 'outperform', one "hold" and one "underperform" and four "sell", according to analysts' recommendations tracked by Reuters.
Tata Steel share price was trading above its 50-day moving average of 474 and below its 200-day moving average of 542.37 levels, respectively. The turnover for Tata Steel share rose to Rs 7.61 crore with 1.54 lakh shares traded on the BSE.
The corporate family ratings (CFRs) are opinions of a corporate group's ability to honour all of its financial obligations, according to Moody's. "Moody's Investors Service has upgraded Tata Steel's CFR to Ba2 from Ba3. The outlook has been changed to stable from positive," Moody's said.
Tata Steel's CFR is supported by its significant, diversified and growing operating base and its globally cost competitive steel operations in India, Moody's said.
These factors, alongside favourable industry dynamics in key operating market in India have translated into the company's sustained track record of improving credit metrics, it said.
Tata Steel's key market is still India, which accounts for 57 per cent of its global steel volumes sold, 54 per cent of consolidated revenues, and 85 per cent of consolidated EBITDA, a result of the strong operating environment and the company's backward integration into producing its key own raw materials of iron ore and coking coal," Moody's said.
During April-December 2018-19, Tata Steel's Indian operations generated EBITDA/a tonne of Rs 17,270, more than three times the profitability of its European operations, it added.
Consequently, strong growth prospects in India augur well for Tata Steel. Also, the successful integration of Bhushan Steel in 2018 and the proposed acquisition of the steel business of Usha Martin have further cemented the steel major's business profile.
The stable outlook reflects Moody's expectation that Tata Steel's strong operating performance will translate into a sustained improvement in credit metrics. Tata Steel is the world's 10th largest steel company by production capacity, achieving 25.1 million tonne of crude steel production in 2017.
In the third quarter of current fiscal, Tata Steel reported a 54.33 per cent jump in consolidated net profit to Rs 1,753.07 crore during the quarter ended on December 31, 2019, helped by higher income.
The company logged a net profit of Rs 1,135.92-crore for the same quarter a year ago. Total income on consolidated basis jumped to Rs 41,431.37 crore during October-December 2018, from Rs 33,672.48 crore in the year-ago quarter. Its total expenses during the said quarter were at Rs 38,362.03 crore as against Rs 30,552.03 crore in the corresponding period of the previous fiscal.
Edited by Aseem Thapliyal