Demand recovery at home and abroad, price uptick may prop Tata Steel stock

The street will also keep an eye on pace of debt reduction and cash flows

Though Tata Steel’s Q2 results, restated to reflect the merger with Bhushan Steel (BSL), cheered up most analysts, the stock fell 1 per cent on Friday. Domestic sales and operating profits were below expectations, while Europe outperformed.

There are multiple global factors to consider. Steel prices remained range-bound in Asia, and rose in Europe. However, costs rose everywhere due to higher fuel (mainly coking coal) and iron ore costs.

Europe is expected to continue registering robust demand in the second half of financial year 2021-22 (FY22), but fuel prices could escalate in winter, and a strong fresh wave of Covid-19