Citi has upgraded Tata Steel Ltd to 'buy' from 'neutral', on the back of attractive valuations, after a 32% underperformance versus the Sensex over the past year.
Says the stock deserves a premium to global peers due to its raw material integration leading to steadier earnings.
Sees global steel margins improving from 2013 on better volumes, a nd India earnings to remain stable.
"Europe EBITDA/t to rise from $18 to $31; recent stock underperformance leaves little room for downside," Citi said in a note on Friday.
Says Indian steel mills with captive raw materials, such as Tata Steel, are better placed to protect margins as prices weaken and steel imports rise.
Citi cut target price to Rs 430 from Rs 446.
