Tata Steel rises over 2% as Citi raises target price

MUMBAI: Shares of Tata Steel moved higher in a lackluster market after Citigroup raised its target price to Rs 600 from Rs 505 earlier while maintaining its 'Buy' rating.

The brokerage is bullish on company’s better Europe spreads and strong India volumes.

Karl Kohler, managing director and chief executive of Tata Steel Europe, says demand in Europe will rise by 3.4 per cent in 2014. In an email interview to Satish John, Kohler seemed upbeat on the turnaround of the company's European operations, having achieved "$200 million of operational savings" last year.

According to him, Europe seems to be entering a period of economic growth, which has seen steel demand rising since the end of last year.

"European demand is expected to rise by 3.4% in 2014, but this rise is from historically low levels and demand is still expected to be more than 25% below the 2007 peak by the end of 2015. Though the strengthening European growth indicators suggest some external support for improved performance in FY15, it remains the case that the company must continue to rely on its own efforts to generate a more sustainable performance," he said.

Back home, Tata Steel has received clearance from the Odisha government on renewal of mining leases. The company is likely to re-start operations at its captive iron ore mines in the state.

Tata Steel's iron ore mines Including Katamati, Bamebadi, Joda East and Joda West — and a manganese mine received the renewal orders. The company's Jamshedpur plant relies on these mines for raw material supply.

All these mines were identified by the state government for renewal in the first batch.

"We have received clearance from the state government late on Saturday evening to start operations at our mines in Odisha," a Tata Steel official told ET.

At 12:00 p.m.; the stock was at Rs 538, up 2.33 per cent, on the BSE. It touched a high of Rs 543.30 and a low of Rs 525.40 in trade today.