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Tata Steel jumps 3% even as EU blocks JV with Thyssenkrupp

Stock traded 2.49 per cent higher at Rs 505.05 on BSE around 10:30 am.

Updated: Jun 12, 2019, 03.43 PM IST
Debt-laden Tata Steel may have to sell assets
Development had little impact on the stock, as it was already communicated by the companies.
Tata Steel shares jumped nearly 3 per cent to Rs 505.40 in Wednesday's session after the European Union's (EU) anti-trust authority on Tuesday blocked its merger with German industrial conglomerate Thyssenkrupp.

The development had little impact on the stock, as it was already communicated by the companies. The merger, aimed at creating the second largest European steel company after ArcelorMittal, had already been abandoned last month by the companies on expectations that the EU would refuse the deal.

"This was merely a formal closure to the JV, as it had already been communicated by the companies to investors," said Sameer Kalra, Founder, Target Investing.

After the merger was called off in May, Tata Steel Group CFO Koushik Chatterjee spoke to ET that the company's investment and credit thesis remain as strong as before, and he does not see any impact on Tata Steel’s strategic plans for India, de-leveraging balance sheet or future growth.

The positive demand outlook for steel is also expected to give the stock a boost.

Industry experts expect India's steel demand to grow at about 7 per cent this financial year on the government's continued focus on infrastructure projects.

Global brokerage Credit Suisse has an outperform rating on Tata Steel, citing stable iron-ore prices and expectation of an improvement in steel spreads.

Besides, the government is mulling changes in norms used for imposing anti-dumping duties with a view to making them more effective to protect domestic players from cheaper imports.

The government has imposed anti-dumping duty on several steel products from countries including China to guard domestic manufacturers from cheap imports.

The stock closed 2.60 per cent higher at Rs 505.60 on BSE.
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