Tata Steel hits over two-year high on strong Q3 results

The stock hit high of Rs 487, its highest level since November 19, 2014 on the BSE

Tata Steel hits a two-year high of Rs 487, up 3% on the BSE in early morning trade after the company reported a consolidated net profit of Rs 232 crore for the quarter ended December 2016 (Q3), against loss of Rs 2,748 crore in a year ago quarter. The stock hit its highest level since November 19, 2014.

The company's revenue rose 14% to Rs 29,392 crore from Rs 25,767 crore a year earlier.

Tata Steel said the rising cost curve, better than expected demand in China and reflation expectations supported sustained rally in steel prices. The growth is largely driven by strong performance from Indian operations.

EBITDA (earnings before interest, tax, depreciation and amortization) margin improved to 12.08% in Q3FY17 from 3.27% in Q3FY16.

“The company showed consistent improvement in the performance for the December quarter at the consolidated level backed by expansion at Indian operations and a turnaround of European Ebitda from negative 6% in the previous year to positive margin of 5% during this quarter,” said Koushik Chatterjee, group executive director (finance and corporate).

Higher visibility on supply side reforms in China, global manufacturing recovery & optimism in the US coupled with prevailing low steel inventory levels is expected to sustain steel prices. EU economy expected to grow gradually. UK economic growth expected to remain steady despite referendum result. The weaker pound will benefit UK exporters, the company said.

At 09:32 am; the stock was up 1.4% at Rs 480 on the BSE. A combined 3.4 million shares changed hands on the counter on the BSE and NSE so far.