Tata Steel is the fourth company of the Tata group of companies to have hit Rs1 trillion market cap.
S&P Global Ratings has upgraded its long-term rating on the company to BB- from B+ and maintained the outlook at stable.
It said the rating upgrade was because the company was on track to slash part of its $15 billion debt in the next two years helped by higher realisations and strong cash flows.
S&P Global expects Tata Steel's adjusted debt of Rs1 trillion, as of March last year, to decline about 30% by March 2023, leading to improved credit metrics.
The stable outlook reflects expectation that Tata Steel will significantly reduce debt over the next 12-24 months, supported by strong operational cash flow. The stable outlook also reflects expectation that the company's debt reduction would result in lower volatility in its credit metrics compared with the previous steel cycle, with greater resilience during downturns, the rating firm said.
Most etal stocks traded higher on Tuesday, with JSW Steel, SAIL, JSPL rising 1.5-2.3%.
"The metals and mining sector has seen a significant pricing uptrend as Chinese data has improved and weakened the dollar. This trend is likely to persist in the medium term and metal stocks are likely to perform well. We upgrade the sector to equal weight", said Axis Securities in a note to its investors.
Media reports suggest local authorities in Tangshan, China, have imposed a fresh set of production curbs on steel value chain until the end of calendar year 2021 to curb air pollution. According to Mysteel consultancy, if the draft plan is adopted, pig iron production and iron ore demand will fall by 22 million tonne and 35 million tonne, respectively.
"Taken together with the possibility of export rebate cuts, we believe exports from China can reduce significantly, thereby supporting steel prices", said Edelweiss Securities in a note to its investors.
"We view the development as positive for steel prices as it comes in the traditionally strong demand period in China. All in all, we retain our positive view on ferrous space with Tata Steel (TP: INR770), SAIL (TP: INR85) and JSPL (TP: INR378) as our top picks" Edelweiss report added.