InvestorQ : Is it true that UBS has upgraded its view and rating on most of the steel stocks like Tata Steel and JSW Steel?
Priyanka N made post

Is it true that UBS has upgraded its view and rating on most of the steel stocks like Tata Steel and JSW Steel?

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Neelam Naik answered.
4 weeks ago
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One of the world’s most respected investment banks and a major player in the Indian capital markets, Union Bank of Switzerland or UBS, upgraded its ratings on steel stocks. It has upgraded both Tata Steel and JSW Steel from neutral to buy ratings. This was after the domestic businesses of these companies reported their highest ever levels of operating profit in the quarter ended on December 2020.

UBS has upgraded the price target of JSW Steel from Rs.310 to Rs.500 while it has upped its target for Tata Steel from Rs.415 to Rs.900. That leaves about 20-25% upside in both the stocks at their current price levels. Most steel companies reported robust realizations in the midst of price hikes, tight supply conditions and robust domestic demand. The global steel and metal prices on the LME have also been largely supportive.

Since the lows of April 2020, both Tata Steel and JSW Steel have almost tripled in price. The three major consumers of steel viz. construction, heavy equipment and autos are all seeing good demand traction leading to a solid demand scenario for steel companies. While Tata Steel is still a diversified global play, JSW Steel remains the pure play on the Indian steel cycle.

Even as Tata Steel has rallied, its current valuations are lagging historical averages. The European turnaround, makes Tata Steel also a good bet for UBS.

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