Buy Tata Steel, target Rs 500 : Credit Suisse

Credit Suisse has a buy call on Tata Steel Ltd. with a target price of Rs 500 .The current market price of Tata Steel Ltd. is Rs 418.5 Time period given by analyst is year when Tata Steel Ltd. price can reach defined target. EU imposed an anti-dumping duty of 13-23 per cent on hot-rolled steel, and about 65-74 per cent on heavy plates imported from China. The global brokerage firm estimates that about 60 per cent of the Tata Steel's Europe output is sold in the EU. Duty additions are close to $100/t to landed prices. A $10/t higher EBITDA is meaningful for the company. Falling GBP is another tailwind for the steel major. A 5 per cent fall in GBP raises EBITDA by $5/t. If regulators and members agree, then pension issue could get resolved, paving way for eventual merger with TK. Credit Suisse raised FY17/18 EPS by 6 per cent on higher EU EBITDA/t assumptions. Tata Steel remains cheap stock based on EV/t basis, said the brokerage note.