Tata Steel rallies 7%; hits 52-week high on bourses

Shares of Tata Steel rallied 7 per cent in early trade on Tuesday and hit its 52-week high levels on the bourses after the company's India operations, generated strong set of numbers for the quarter ended September 30, 2020.

The stock of Tata Steel opened on a bullish note at Rs 504.70, then gained further ground and touched a high of Rs 529.50 on BSE, up 7.60 per cent from its previous close.

Similar movement was witnessed on the NSE as well, where the stock opened at Rs 506, then gained further and touched its 52-week high of Rs 525.65, registering a gain of 6.80 per cent over its previous close.

Tata Steel reported consolidated EBITDA of Rs 54 billion, significantly higher than market expectation "driven by out-performance in Standalone India operations," JM Financial Institutional Securities said in a research note.

"India operations delivered an EBITDA of Rs 47 billion (vs. JM Financial's estimate of Rs 35 billion) -- implying an EBITDA/t of Rs 13.9k driven by significant operating leverage as volumes increased 61 per cent QoQ," the report said.

Tata Steel Executive Director and CFO Koushik Chatterjee said that despite the pandemic, the company has delivered one of the best quarterly results in India in recent times.

"This was driven by a relentless focus on operating performance and a reduction in our cash costs by almost 14 per cent on a quarter on quarter basis," he said.

India operations, he said, generated an Ebitda (earnings before interest, tax, depreciation and amortisation) of Rs 6,025 crore during July-September 2020. The Ebitda during the same quarter of the previous financial year was at Rs 4,033 crore, according to company data.

However, Tata Steel's consolidated net profit declined about 50 per cent to Rs 1,665.07 crore in the September 2020 quarter. The company had clocked a net profit of Rs 3,302.31 crore in the corresponding quarter of the previous financial year.