By Aditya Raghunath
Investing.com — Expect the rally in steel stocks to continue says brokerage firm CLSA. The firm upgraded its ratings for companies and gave Tata Steel Ltd (NS:) a ‘buy’ recommendation and an ‘outperform’ rating for JSW Steel Ltd (NS:).
CLSA said, “upward revisions in consensus as current estimates imply a Rs 10,000-12,000 per tonne correction in steel prices versus spot. As the domestic prices are trading at a 10% discount to import parity, such a sharp correction is unlikely unless demand drops sharply (not our base case)”.
The brokerage firm said that every Rs 1,000 per tonne higher steel prices versus the base case leads to $235 million higher deleveraging for Tata Steel and JSW Steel.
CLSA has upped its target for Tata Steel to Rs 950 which is an upside of almost 19% from its current price of Rs 799.5. Its target for JSW Steel is Rs 490 which is an upside of almost 5% from its current price of Rs 467.35.
“With domestic iron ore supply improving and volume growth from commissioning of new capacities, we expect strong earnings growth over the next two years,” said CLSA.
On March 30, Investing.com had reported how Motilal Oswal (NS:) was bullish on Steel Authority of India Ltd. (NS:) with a target of Rs 104 for the stock. SAIL closed at Rs 79.1 yesterday.