Tata Steel downgraded to 'Sell' as Kotak Institutional Equities sees risk-reward turning unattractive
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Stating risk-rewards turn unattractive after the recent rally, domestic brokerage firm Kotak Institutional Equities has downgraded Tata Steel from a 'Reduce' rating to a 'Sell' rating with a target price of Rs 145, which indicates a downside of 9% from the previous closing price of Rs 159 per share. The brokerage expects Indian and European steel spreads to remain under pressure due to higher imports, a weak export market, and delayed cost benefits despite recent stimulus measures by China. "Steel margins are likely to be under pressure in the near term," Kotak stated. Meanwhile, Tata Steel’s domestic volume growth is projected to underperform compared to its peers, primarily due to delays in expansion projects. The report notes that Tata Steel has seen a compound annual growth rate (CAGR) of 4.1% in volumes over the past five years, compared to 8.8% for competitors like JSW and JSPL. "Given the expansion pi...