Buy Tata Steel; target of Rs 720: Edelweiss
Edelweiss is bullish on Tata Steel has recommended buy rating on the stock with a target price of Rs 720 in its research report dated September 12, 2017.
Edelweiss' research report on Tata Steel
Tata Steel (TSL) stands to benefit from the Regulatory Apportionment Arrangement’s (RAA) approval to the British Steel Pension Scheme (BSPS), as it will significantly de-risk TSL’s pension commitments, besides eliminating uncertainties surrounding deficit funding. We had highlighted this as a key catalyst for the stock in our recent note Q1FY18 result update, Tata Steel - Extends impressive performance; ‘BUY’. We believe there now exists higher probability of further restructuring of Tata Steel Europe (TSE) including a joint venture (JV) with ThyssenKrupp’s Steel Europe division that could lend further fillip to the stock. Maintain ‘BUY’ with our SoTP-based target price of INR720.
We believe that resolution of BSPS is a significant enabler of further value accretion in the stock through potential restructuring of TSE. We also remain upbeat on the domestic division led by ramp up of Kalingangar plant amidst benign pricing environment. Maintain ‘BUY/SO’ with our SoTP-based TP of INR720.
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