Tata Steel share price hits 52-week high on £1.25 bln deal with UK government; here's what analysts say
Tata Steel share price touched a new 52-week high on Monday's trading session, following the announcement of a joint agreement between the company and the UK government on a proposal to invest in cutting-edge Electric Arc Furnace steelmaking at the Port Talbot site with a capital cost of £1.25 billion, inclusive of a grant from the UK Government of up to £500 million. Tata Steel stock price touched intraday high of ₹134.85 and low of ₹131.85.
Tata Steel share price opened at ₹134.75 apiece on BSE. At 10:55 IST, Tata Steel shares were trading flat at ₹132 per share on BSE.
According to Rajesh Bhosale - Equity Technical and Derivative Analyst, Angel One, Tata Steel stock experienced a robust gap up opening, but it failed to maintain momentum as there was no continuous buying activity, resulting in a decline from the morning highs. “Nevertheless, the overall sentiment remains optimistic, with a recommended buying range of 128 - 130, while the stock faces a significant hurdle at 140 as an immediate resistance level," added Bhosale.
According to the company's exchange filing, the project would increase the UK's steel security and be the first significant step towards the local steel industry's decarbonization, resulting in a reduction of direct emissions of 50 million tonnes over a ten-year period. With a high degree of circularity, it would make use of domestic scrap steel that is strategically available and encourage local value addition in the UK.
The proposed project would ensure that steelmaking would continue in Port Talbot after the switchover and make Tata Steel UK a lucrative, capital-efficient, and sustainable business. With the support of the UK Government, the project has a compelling investment case.
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