Corus, earnings talk lift Tata Steel stock 2%
Tata Steel shares extended their winning streak on Monday, climbing around 2% to close at Rs 519.30.
By TNN |
MUMBAI: Tata Steel shares extended their winning streak on Monday, climbing around 2% to close at Rs 519.30. With this, the stock of India���s largest private sector steel player has risen roughly 12% in the previous three trading sessions ahead of the auction process for Anglo-Dutch steel maker Corus Group and the October-December earnings announcement on Tuesday.
Analysts attribute the upside in the share in recent times more to expectations of robust earnings, than the outcome of the Corus auction. Tata Steel is expected to report a 20% growth in net sales at Rs 4,434 crore and 45% rise in net profit at Rs 1,092 crore for the quarter under review, as per an ET earnings estimate poll.
While it is felt that the recent upside in the share has factored in majority of the expected positives from the earnings, analysts are looking forward to the much-awaited result of the final nine-round auction process of Corus, which will decide its acquirer. Though most analysts and the foreign media are more positive about the chances of Brazil���s Companhia Siderurgica Nacional (CSN), the only other bidder for Corus, some believe Tata Steel would go all out to win the final knockout, despite exorbitant valuations.
���The Corus acquisition is crucial for Tata Steel���s long-term growth strategy. So, I think Tatas may bid aggressively for it,��� said Vishal Chandak, analyst, Emkay Shares and Stockbrokers. The talk is that Tata Steel is likely to place a surprise counter bid for CSN���s 515 pence per share before the auction process.
Though there is no consensus about the likely bid price, analysts speculate the final auction price could be between 550 pence and 580 pence per share At 515 pence per share, Corus is valued at $9.6 billion, making it more expensive than the Arcelor acquisition by Mittal Steel last year. Macquarie Research, couple of months ago, had said Tatas can ���comfortably afford��� the acquisition even at $12 billion or 643 pence per share.
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���Corus��� expected cash flow is being securitised to raise around $6.5billion, leaving $5.5billion to be raised as equity in Tata Steel (UK),��� according to the Macquarie report. The winner of the bid will emerge as the 5th biggest steel maker in the world. Corus shares rose to over a 7-year high of 560 pence per share on the London Stock Exchange on Monday.Start a SIP with as low as ₹500 with ET Money App!
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