Shares in Tata Steel jumped over 5 per cent to hit intraday high of Rs 370.95 on Thursday after iron ore prices jumped nearly 6 per cent overnight.
Iron ore is one of the key ingredients as far as steel making is concerned.
Analysts say that rise in iron ore prices will be beneficial for Tata Steel as it does not buy iron ore from the open market for its domestic operations which accounts for 60 per cent of its total revenue.
Tata Steel mainly uses iron ore produced from its own mines and if rise in iron ore price reflects in the price of steel then it will help boost company's profitability.
Iron ore prices had corrected over 60 per cent in past one year but now it is up over 15 per cent since its April lows.
Tata Steel shares have underperformed the broader indices in last one year by falling over 14 per cent compared to 23 per cent gain in the Nifty.
Tata Steel shares closed 5.25 per cent higher at Rs 369.80 apiece. It was the second highest gainer in Nifty.
source: http://profit.ndtv.com