Tata Steel: Cancelling of Tata Steel deal lifts TRF shares to 8-year high

Mumbai: Shares of TRF, a Tata Group enterprise, surged to their highest level in more than eight years after its plan to amalgamate with promoter Tata Steel was called off earlier this week. The stock, which rose 10% on Friday – the highest tradable limit of the day – to ₹432.50, has jumped close to 59% in the past three days following the scrapping of the merger plan.

The scheme of amalgamation between TRF and Tata Steel, announced in 2022, was seen unfavourable for shareholders of TRF. “The swap ratio announced at the time of the merger was not very beneficial for the minority shareholders and the shares had seen a correction then…so this is a reversal of that,” said Amit Kumar Gupta, founder of Fintrekk Capital.

TRF shares had seen a sharp decline post the announcement in 2022, remaining locked in a 5% lower circuit – the lowest tradable limit of a trading day- for 16 consecutive sessions, and declining 56% in a month following the announcement.

A turnaround in the company’s business operations led to the amalgamation being called off. “Over the last few quarters, the company has seen improvement in business performance owing to ongoing significant support from Tata Steel in the form of placement of order(s) and infusion of capital coupled with company’s efforts on enhanced debtor collections and, cost and asset optimization,” TRF said in an exchange filing.

The company, which is in the business of undertaking turnkey projects of material handling for the infrastructure sector, and production of such material handling equipment, has been loss-making since 2012-13 (April-March) for several years, turning profitable only in FY23, and so far in FY24.

Shares of TRF have seen a higher-than-average volume in the last four sessions, with the number of shares for which delivery was taken also significantly higher, data on the NSE showed.”The next target for the shares would be around ₹600 over a 6-12 month period, but there is some consolidation likely in the near term given the recent sharp upmove,” said Sudeep Shah, the head of technical and derivatives research at SBICap Securities.

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