1:10 Split, 1:2 Bonus, 29 Dividends; Tata Group's Steel Giant To Raise Rs 2,700 Crore Via NCDs; BUY OR SELL?

Tata Steel Ltd, the behemoth of Tata Group engaged in making steel products, recorded significant correction on March 20th. Overall, in a single day, the stock dropped by over 3% and neared Rs 145.70 levels. The performance comes after the company announced its fundraising plan of Rs 2,700 crore via issuance of non-convertible debentures. The highest target price for Tata Steel is at Rs 170 apiece.

Tata Steel Share Price:

On BSE, Tata Steel's share price ended at Rs 145.70 apiece, down by 1.98% on March 20th with a market cap of Rs 1,81,883.76 crore. During the trading session, Tata Steel emerged as the top bear on exchanges with a drop of 3.2% to hit an intraday low of Rs 143.85 apiece.

Nonetheless, Tata Steel is moving gradually towards its 52-week high of Rs 159.50 apiece, while trading above 43% from its 52-week low of Rs 101.65 apiece.

Broadly, Tata Steel is still up on a larger scale. Its 5-day performance is up by 3%, while in a month, the stock gained marginally by 1.29%. Further, its six-monthly performance soared by 14%. YTD, the stock is above 4%. In a year, its upside is nearly 39%.

In the long-term, Tata Steel is a multi-bagger with a surge of a whopping 181% on BSE. All-time gains are currently around 1,018%.

Tata Steel Fundraising:

The company's Committee of Directors have considered and approved the allotment of 2,70,000 NCDs of the face value of Rs 1 lakh each, aggregating to Rs 2,700 crore. The NCDs are Fixed Rate, Unsecured, Redeemable, Rated, and Listed.

Tata Steel's Rs 2,700 crore NCDs will be listed on the Wholesale Debt Market Segment of BSE Limited.

Tata Steel's Other Corporate Affairs:

Dividends: In the last 12 months, Tata Steel paid dividends up to Rs 3.60 per share, while its current dividend yield is at 2.47%. As per Trendlyne data, the company paid up to 29 dividends since May 2001.

Stock Splits: Apart from dividends, the other latest corporate action carried by Tata Steel is its split. The steel giant turned ex-split in July 2022, in the ratio of 1:10. Accordingly, Tata Steel's face value of Rs 10 was trimmed to Rs 1.

Bonus Issuance: Tata Steel has given 1 bonus reward to investors so far. The company delivered a bonus issue of 1:2 in August 2004.

Tata Steel Target Price:

Broadly, brokerages expect Tata Steel's share to rise ahead. However, there is a cautious stance in the steel sector by CLSA.

In its latest research note, CLSA said, "We reiterate our cautious stance on the Indian steel sector driven by three key points: (1) The profit pool in India should incrementally move towards miners (iron ore/coking coal) from converters as steel capacity addition picks up pace. We forecast steady state spreads below the past average (in US$ terms). (2) Unlike in the past, valuations for steel stocks have risen in the past eighteen months to 1 std. dev. above their median, and hence while spreads are at a trough, multiples are not. (3) Consensus estimates are not factoring in spread compression. Hence, we downgrade Tata Steel from O-PF to SELL and JSW Steel from U-PF to SELL."

On the contrary, at latest to recommend BUY is JP Morgan. The global brokerage has maintained an overweight on the company for a target price of Rs 170/share. The outlook is positive. Apart from this, brokerage FISDOM had earlier selected Tata Steel among the top picks to benefit during the election period. Fisdom's long target is Rs 170, while its first target of Rs 155 apiece has been achieved by Tata Steel.

Also, HDFC Securities latest view on Tata Steel is BUY.