Morgan Stanley stays overweight on Tata Steel

Morgan Stanley has retained its 'Overweight' rating on Tata Steel and set a price target to Rs 566.

Tata Steel should gain significantly from improving backward integration, shrinking fixed costs and falling raw material prices, though macro risks to steel demand in Europe remain.

After the 3-mt expansion in 1QF13, Tata Steel will likely become one of the largest profit-generating steelmaking sites globally.

Morgan Stanley expects consolidated earnings to strengthen and volatility to decline.

It expects net debt-equity to fall to 1.08x by FY12 and 0.91x by FY13 from 1.4x at end-FY11.