Shares of Tata Steel were trading lower for the ninth straight day on Tuesday, down 2 per cent in the intra-day trade on the BSE, at Rs 462 apiece during the early morning trade. The stock has been falling ever since concerns over the European Commission's (EC) likely rejection for the proposed joint venture between the company's European arm and ThyssenKrupp surfaced.
So far, during the nine trading sessions in May, stock of the steel major has melted 17 per cent, as compared to a 5 per cent decline in the S&P BSE Sensex. It was trading close to its 52-week low price of Rs 442, touched on January 29, 2019-in intra-day deal.
"The EC on May 10, discussed the proposed joint venture with both Thyssenkrupp and Tata Steel. Based on the feedback received, it is increasingly clear that it is not intending to clear the proposed joint venture as it expects substantial remedies in the form of sale of assets of the proposed venture," Tata Steel said in a statement.
Tata Steel and Thyssenkrupp had signed definitive agreements on June 30, 2018 to combine the steel businesses in Europe to create a 50:50 pan European JV company focusing on customer centricity, technology and sustainability.
“The joint venture had opened the possibility of creating more sustainable operations and a gradual exit over the long term, which now appears unlikely. Steel spreads in EU have halved from the recent peak due to demand weakness and high raw material prices. We expect Tata Steel Europe to generate EBITDA/t of USD60/t in FY20, with a risk to the downside,” Motilal Oswal Securities said in company update with ‘neutral’ rating on the stock.