Tata Steel sells Riversdale stake for $1.11 bn

Tata Steel has sold its 26.27% stake in Australian coal miner Riversdale to global mining major Rio Tinto for AUD 1.06 billion ($1.11 billion). The Anglo-Dutch miner Rio Tinto holds 73.2% stake in Riversdale, which has an estimated 13 billion tonne reserves in its two projects in Mozambique - Benga and Zambeze.

The deal would be very positive for the company as the cash flow will further reduce the net debt to equity ratio of the company.

The company reported good set of numbers in fiscal year 2011 and at the CMP of Rs.553 it's trading at attractive valuations as well (Tata steel FY11 results and valuation). However global correction in commodity prices could be a dampening factor in the short term.

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