Tata's Rs 160 Steel Stock Will Be In Focus On Highest Ever Crude Steel Output; 3 Brokerages Say Buy

116-year-old steel giant company, Tata Steel will be in focus in next week's trading session due to its operational performance announcement for Q4FY24. This Tata Group-backed steelmaker achieved the highest-ever annual crude steel production of ~20.8 million tons, with a growth of 4% YoY by debottlenecking across sites and achieving higher steel production at Neelachal Ispat Nigam Limited. In 4QFY24, crude steel production was broadly stable and stood at around 5.38 million tons.

Also, Tata Steel's India deliveries increased by 6% YoY and surpassed the previous best recorded in FY2023. Domestic deliveries grew at a higher rate of 9% YoY leveraging India steel demand growth and our agile business model. In 4QFY24, deliveries grew by 11% QoQ and 5% YoY to 5.41 million tons and were the highest-ever quarterly deliveries.

In the case of Tata Steel Netherlands, this subsidiary posted steel production of 4.80 million tons in FY24, and deliveries were at 5.30 million tons. For the quarter, production and deliveries improved on a QoQ basis primarily driven by a restart of BF6 upon completion of relining in early February.

Meanwhile, Tata Steel UK's liquid steel production in FY2024 stood at 3.02 million tons and deliveries were at 2.80 million tons. For the quarter, production was broadly stable on a QoQ basis while deliveries were up 8% to 0.69 mn tons. 3Q deliveries were impacted by seasonal factors.

As per the regulatory filing, here are the key highlights of Tata Steel's Q4 performance ahead of the full-fledged earnings report:

1. Automotive & Special Products' segment deliveries increased by 8% YoY in FY2024 to be at ~2.9 million tons, surpassing the previous best recorded in FY2023. Volumes have been aided by higher deliveries of hot-rolled and cold-rolled steel to automotive OEMs.

2. Branded Products & Retail' segment deliveries increased by 11% YoY in FY2024 to be at ~6.5 million tons, surpassing the previous best recorded in FY2023. This was primarily driven by record annual sales of the well-established retail brand Tata Tiscon, which crossed 2 million tons.

3. Industrial Products & Projects' segment deliveries increased by 6% YoY in FY2024 to be at ~7.7 million tons, surpassing the previous best recorded in FY2023. Among sub-segments, engineering registered best best-ever annual sales led by pre-engineered buildings and railways among others.

4. Revenues from Tata Steel Aashiyana, an e-commerce platform for Individual Home Builders, stood at Rs. 2,240 crores in FY2024 and were up 30% YoY driven by best-ever 3Q and 4Q sales.

Currently, three brokerages have announced coverage of Tata Steel stock. Three brokerages have set the highest target price between Rs 170-180. JP Morgan and Fisdom have set the target price of Rs 170 per share on Tata Steel, while the latest to join the bandwagon is Axis Securities which predicts a target of Rs 177 in the steel giant.

Tata Steel Corporate Affairs:

Tata Steel has carried 1 bonus issue and 1 stock split while holding a strong track record of dividend payouts.

Bonus Issue: Tata Steel issued a bonus in the ratio of 1:2 in August 2004.

Stock Splits: The company turned ex-split recently in July 2022 to the tune of 1:10. The face value of Rs 10 each in Tata Steel has split into to Rs 1 each since then.

Dividend: Since May 2001, Tata Steel has delivered up to 29 dividends, as per Trendlyne data. In the past 12 months, the dividend payout was Rs 3.60 per share. However, Tata Steel's highest dividend payment is Rs 51 per share. On the current market price, Tata Steel has a dividend yield of 2.23%.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.