Upper circuit: Tata Group single digit PE stock hits 52-week high; will its upper circuit run continue?

This particular stock surged to its upper circuit limit of 20 per cent, catapulting to a fresh 52-week high.

On Wednesday, the NSE benchmark commenced trading at 22,045 and concluded the session nearly unchanged at 21,930.50, representing a marginal uptick of 0.01 per cent. Noteworthy activity unfolded in the broader market segments, with the Nifty Mid-Cap and Small-Cap indices posting gains of 0.75 and 0.71 per cent, respectively.

Amidst the broader market movements, attention gravitated towards one of the stalwarts within the Tata Group, namely TRF. This particular stock surged to its upper circuit limit of 20 per cent, catapulting to a fresh 52-week high.

TRF, an integral entity within the Tata conglomerate, holds strategic significance with Tata Steel Ltd (TSL) owning a notable 34.11 per cent stake as of March 31, 2023. Specializing in material handling, TRF plays a pivotal role in fulfilling orders from TSL, leveraging its advantageous proximity to Tata Steel's plant and procurement of raw materials, which predominantly includes steel from TSL. Such advantageous positioning endows TRF with a formidable competitive edge over external vendors, if any, in catering to TSL's requirements.

The recent surge in TRF's stock can be attributed to the following key catalyst: Over the preceding quarters, the company has demonstrated notable improvements in its business performance. This positive trajectory is largely attributable to the unwavering support extended by Tata Steel, encompassing substantial order placements and capital infusion, alongside the company's proactive measures in bolstering debtor collections, and optimizing costs and assets.

However, in a significant turn of events, the Board, on February 6, 2024, has opted against proceeding with a proposed scheme and has ratified its withdrawal. This decision finds concurrence from the Board of Directors of Tata Steel, with an application for withdrawal duly submitted to the Honorable National Company Law Tribunal (NCLT), Kolkata Bench. Consequently, the NCLT Convened Meeting of Equity Shareholders scheduled for Thursday, February 8, 2024, to deliberate on the aforementioned scheme stands rendered infructuous in light of the withdrawal decision.

Disclaimer: The article is for informational purposes only and not investment advice.