Favourable domestic realisations, deals to keep Tata Steel's prospects firm

Tata Steel’s strong domestic margin improvement during the September quarter, which was ahead of estimates, has increased the Street’s confidence about the company’s prospects. The profitability trend is likely to continue, aided by supportive domestic steel prices, turnaround in acquired Bhushan Steel operations, and Kalinganagar expansions (5 mtpa Phase-II expansion started recently), observe analysts. 

With expected debt reduction over the next year, brokerages are bullish. Analysts at Edelweiss Securities expect the performance to be driven by domestic operations on the back of stable spreads, ramp-up at Bhushan Steel, and the possibility of an improvement in its profitability.

The company has reported domestic