Invest in Tata Steel

Sanjeev Prasad, Executive Director & Co Head, Kotak Instl Equities, is of the view that one can invest in Tata Steel. “If I look at it on 2011 basis the stock looks okay, not too expensive,” he said. Prasad told CNBC-TV18, “The one which we have continued to like Hindustan Zinc but even that’s moved up quite a lot. It is now trading at 16.5 times 2010 EV/EBITDA. So I am not too sure whether there is a lot of value out there, may be on 2011 numbers there is still some value out there. Tata Steel still has a case for investment over here because if I look at it on 2011 basis the stock looks okay, not too expensive over there especially on a PE basis, on EV/EBITDA, it is still at about 6 times which is not very comfortable I would think. But if they manage to replace all this debt with equity I think the company will be in a far better position as far as the balance sheet is concerned. Sterlite is looking fairly valued. The fair value is about Rs 550, so that looks fairly valued now.”