Tata Steel shares rallied over 5 per cent in early trade on May 14 on easing inflation in India and the US, a trade truce between the US and China, in-line Q4 show and capex announcement. Read on for more details
Tata Steel Share Price: Shares of Tata Steel jumped as much as 5 per cent in early trade on May 14 on account of a slew of positive developments for the company. During the session, the steel stock touched an intraday high of Rs 157.15 per share on the NSE, up 5.16 per cent against its previous close.
From its April low of Rs 125.30, it has rebounded by over 25 per cent. However, it is still trading at a 15 per cent discount to its 52-week high of Rs 184.60.
This rally in Tata Steel pushed the Nifty Metal index higher by up to 2.8 per cent in today's session, making it the top sectoral gainer. The Tata Group stock holds 18.75 per cent weight in the metal index, the highest among other constituents. Other heavyweights JSW Steel, Hindalco, and Vedanta also gained in the range 2 per cent to 3 per cent. These four stocks collectively hold over 60 per cent weight in the 15-constituent index.
All the 15 constituents of the index traded in the green as of 12:30 PM.
Slowing Retail Inflation in US, India: The easing of retail inflation in the United States (US) and India is being seen as a positive for the metal sector. India's headline inflation eased to 3.16 per cent in April, the sixth consecutive month of decline, while the core retail inflation in the US stood steady at 2.8 per cent in April, unchanged from the previous month.
Softer inflation leads to lower production costs for the company and thereby higher profit margins, increases consumer spending and thus metal demand, and could even lead to lower interest rates. It is anticipated that these factors will lead to stronger earnings for metal companies.
US-China Trade Deal: US President Donald Trump's tariff tantrums had earlier raised concerns about a potential slowdown in the global economy. Investors were concerned that this economic slowdown could weigh on metal demand.
Since, now the two economic superpowers have made a truce to lower the exorbitantly high tariffs they imposed on each other, for at least 90 days, this has eased the concerns of an economic slowdown and thereby, eased concerns of a slump in metal demand.
Similarly, the recent trade deals between the US and the United Kingdom (UK) and the Free Trade Agreement (FTA) between India and the UK have further eased this concern.
Tata Steel reported a consolidated net profit of Rs 1,200.88 crore, a year-on-year (YoY) gain of 116 per cent from Rs 554.56 crore in the year-ago quarter. Its consolidated revenue from operations came in at Rs 56,218.11 crore, dipping 4.2 per cent from Rs 58,687.31 crore in the corresponding quarter of the previous year. The company logged higher profits in the quarter despite the dip in its revenue due to lower input costs.
The management also declared a dividend of Rs 3.6 per share and fixed June 6 as the record date for the same.
Further, Tata Steel has earmarked capital expenditure of Rs 15,000 crore for its operations in India, the UK, and the Netherlands for the current financial year, as PTI report said, citing senior officials.
"For FY26, we are looking to have a capex of Rs 15,000 crore," the company's CEO & MD TV Narendran told PTI.
Brokerage firm Elara Capital said, Tata Steel's Q4 FY25 consolidated Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) fell by about 1 per cent YoY but increased by around 46 per cent quarter-on-quarter (QoQ) to Rs 6,560 crore, which was in line with the brokerage firm's estimates. It added that despite weak steel prices being a major challenge in Q4, higher volumes across operations and lower coking coal costs helped support earnings.
Tata Steel has set a cost-saving target of Rs 11,500 crore for FY26, which is approximately 45 per cent of the FY25 reported consolidated EBITDA, Elara said. Further, the brokerage said, Tata's operations in India are expected to benefit from higher steel prices, a reduction in imports, and the ramp-up at its Kalinganagar facility in Odisha.
Similarly, ICICI Securities and Nuvama Institutional Equities also said the company's Q4 FY25 results were in line with their estimates.