The lowest cost steel producer in the world Tata Steel which was on 56th position on 19th OCt.2006with 5 million tonne steel capacity jumps to 5th position with 24 million tonne capacity on 20th Oct 2006 when its board declared acquisition of CORUS GROUP having steel producing capacities in UK and Netherland.
Its expected that Tata Steel will rise to 4th position in the next 5 years just behind POSCO, NIPPON and MITTAL ARCELOR.Tata Steel is expanding and hopes to have capacity of 40 million tonnes by 2012.So beyond 2009 and upto 2012 its growth rate should be 5 million tonnes per year avearge.
By 2012 Tata Steel should have a turnover of US $ 24 billion or Rs.120.000 crores and Net profit of US $ 5 billion or Rs. 25000 crores.Tata Sons will increase their stake in Tata Steel from present 30% to 51% by merging Tata Steel UK having CORUS GROUP shares with Tata Steel, the parent company .Equity is expected to rise to Rs. 1100 crores or 110 crore shares, thus giving an EPS of Rs 220 per share and a share price of Rs. 2000 as most of its peers command P/E of 12+.So for next 5 years I see an appreciation in the share price of Tata Steel in excess of 40% on YOY as the share shall be rerated and command P/E of 12 from 7.5 at present.Yes most of the Dhanvarsha shall happen after 2009.I intend HOLDING the shares for next 5 years.