Shares of Tata Steel jumped on Thursday after the company received a £500 million (₹5,474 crore) grant from the U.K. government.

What Happened: The U.K. Government awarded the grant to the Tata Group firm for its ambitious £1.25 billion (₹13,688 crore) green steel project in Port Talbot. This is besides a planned £750 (₹8,213 crore) million investment.

The agreement will facilitate the installation of a state-of-the-art electric arc furnace at the Port Talbot Steelworks in Wales, a development anticipated to transform steel production in the UK.

See Also: Suzlon Peer Inox Wind’s Subsidiary Completes ₹350 Cr Equity Raise

The project, representing the most substantial investment in the UK steel industry in several decades, is set to ensure the long-term continuation of steel production in Port Talbot.

This initiative will play a vital role in safeguarding the UK’s steel sovereignty while also preserving 5,000 jobs, providing economic stability to the local community and beyond.

In addition to its economic impact, the project will have a significant environmental benefit. The installation of new assets is projected to reduce the UK's total industrial carbon emissions by 8%, while at Port Talbot itself, emissions are expected to be reduced by 90%, marking a major step forward in the country’s transition to cleaner and more sustainable industrial practices.

Brokerage Views: Morgan Stanley believes that the signing of the funding agreement is a positive development for Tata Steel. The global brokerage had an “underweight” call on the stock with a target price of ₹135.

There is limited clarity on the renewed discussions with the U.K. government, it said. The brokerage said it awaits further information on whether any additional financial support will be available for affected employees. The absence of any additional project costs should be considered an incremental positive development, Morgan Stanley noted.

Price Action: Tata Steel’s shares gained 2.79% to trade at ₹152.30 on Thursday morning.

Read Next: NBCC Signs MoU With MTNL To Develop Prime Land In New Delhi, Project Valued At ₹1,600 Cr