Buy Tata Steel, target Rs 903: Edelweiss

Edelweiss has a buy call on Tata Steel Ltd. with a target price of Rs 903. The current market price of Tata Steel Ltd. is Rs 556.1 Time period given by the brokerage is a year when Tata Steel Ltd. price can reach defined target.

Tata Steel Ltd., incorporated in 1907, is a largecap company with a market cap of Rs 68502.35 crore.

Investment rationale by Edelweiss

Putting an end to uncertainties, Tata Steel (TATA) and ThyssenKrupp (TK) have signed a definitive agreement to merge the former’s European operations and TK’s Steel Europe division. Key takeaways: 1) TATA’s share in the JV & debt transfer to the JV remain unchanged as per the MoU; 2) the JV will issue 10% equity as warrants to TK in case of an IPO; and 3) management anticipates EUR400-500mn synergies. We view the development as positive for the TATA stock, which had been roiled by the recent uncertainties on the deal. We perceive additional ~INR85/share value pursuant to completion of the transaction. Maintain ‘BUY’ with target price of INR903.