Last updated: 14 Aug, 2020 | 05:08 am
Steel manufacturing firms have been one of the worst-hit sectors due to the ongoing pandemic. According to estimates by India Ratings, the nation’s steel demand in FY2020-21 is slated to fall by about 15%. This will lead to oversupply, suppressed prices and rising inventories once the lockdown is lifted. However, Tata Steel, being the largest steel producer, is well-poised to handle the ongoing crisis.
The company has built up a liquidity buffer of Rs.20,144 crores including Rs.14,178 crores of cash & cash equivalents to help it tide through the current crisis. The India business is on-track to recovery, and the company has ramped-up its capacity utilizations to 90% levels with total sales in June exceeding FY20 average monthly sales. However, in Europe, spreads are at unsustainably low levels. Tata Steel said that it is engaged with respective governments in UK and Netherlands for their support.
Consensus recommendation: Buy (Based on views of 26 analysts from external institutions)