Why This Tata Stock Is Upbeat Today

Shares of Tata Steel were climbing early on Tuesday, going up over 1%.

What Happened: The Tata Group company’s shares are upbeat today as global credit rating agency Moody’s elevated its long-term issuer rating to Baa3 investment grade, up from Ba1. Additionally, the ratings agency have shifted the steel major’s outlook from positive to stable, driven by an anticipation of improved profitability as the company continues efforts to reduce its debt burden.

“The upgrade is a reflection of the significant deleveraging achieved by Tata Steel through the reduction of its gross debt and our confidence that the company will maintain prudent financial practices, characterized by a balanced capital allocation and financial metrics that align with a Baa3 rating,” Kaustubh Chaubal, a Senior Vice President at Moody’s commented.

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This upgrade is also underpinned by the expectation that Tata Steel will maintain a robust credit profile due to its strong market position in India. Despite the impact of softer steel prices on revenue, Moody’s anticipates an increase in profitability for the company.

Earlier this month, Tata Steel and the UK government unveiled a proposal to commit £1.25 billion (₹12,874 crore) towards the establishment of electric arc furnace steel production facilities at the Port Talbot site.

Price Action: Tata Steel’s share price was up 1.33% to trade at ₹129.10 as the markets opened on Tuesday.

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