Tata Steel Leads The Metal Index Post Q4 Numbers

Tata Steel, the Indian steel manufacturing major witnessed a rise of over 4 per cent in Wednesday’s early morning session. The shares of the company shot up by 4.1 per cent after the company tabled an unexpected Q4 on Tuesday. 

Tata Steel’s 4Q results were sharply higher than estimates, driven by Europe (better realisations and lag in flow-through of coking coal costs) and improvement in ferro alloy volumes and realisations. SA Ebitda/t at Rs13,586 surprised positively.

Europe operations showed an improvement, driven by higher realisations and sharp reduction in other costs. 1Q18 should see some spread reversal, given the steel price and RM cost trends. There is steady progress on delinking of the UK pension scheme and a possible JV albeit at a large one-time payment of GBP550m and ~33% equity stake transfer in the UK operations. Maintain ADD.

The stock of the company is contributing nearly 80% to the BSE Metal index, making it the top-gaining index on Wednesday. Following Tata Steel, JSW Steel, Hindalco, and Vedanta Steel are among the top contributors to the index.

JSW Steel is up by 3.1%, Hindalco is up by 1.7%, Vedanta Steel is up by 1.5%, and Jindal Steel is up by 2% on the BSE.

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