InvestorQ : What is leading to a surge in steel stocks like JSW Steel and Tata Steel in such a big way? Most stocks are now quoting at yearly highs?
ishika Banerjee made post

What is leading to a surge in steel stocks like JSW Steel and Tata Steel in such a big way? Most stocks are now quoting at yearly highs?

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2 months ago
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Yes, it does look like Steel is back in the reckoning. It is not just about China demand and LME prices. It is also about the revival in demand for steel in India and a big bet that India infrastructure investments in the coming years will take off in a big way.

Needless to say, Tata Steel and JSW Steel hit respective 52-week highs during the week. In addition to strong earnings reported in the Sep-20 quarter, both Tata Steel and JSW Steel have also guided for growth in demand and profits in the coming quarters.

Steel stocks across the board including JSW Steel, Tata Steel, SAIL and JSPL rallied between 5-7% on Thursday. You will be surprised to know that Tata Steel is actually up 40% in the last one month. This is largely on the back of strong volume growth in Sep-20 quarter and strong cash flow generation. It also saw six-fold increase in EBITDA over Jun-20 quarter.

Apart from the improved realisations and cost efficiencies, another big story playing in favour of Tata Steel is its decision to finally exit the European business which it inherited from the Corus acquisition in 2007. It has already taken the first step by hiving off its Dutch steel business.

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