Tata Group's steelmaker giant, Tata Steel rallied sharply in a month, defying market bears and volatility. Tata Steel is the largest metal company in India in terms of market share. This metal stock zoomed by 11-12% on BSE and NSE in a month, better than Sensex and Nifty both of which gained between 1-2% for the same period. At the latest, Prabhudas Lilladher has recommended ACCUMULATE this Tata stock.
Tata Steel Share Price:
On NSE, Tata Steel's share price stood at Rs 161.90, up by 1.2% on April 19 with a market cap of Rs 2,02,108.30 crore. The stock is near its 52-week high of Rs 169.80 apiece while trading up by 55.6% from its 52-week low of Rs 104.05 apiece.
Tata Steel's upper and lower price bands are Rs 176.05 and Rs 144.05 respectively. While the stock's adjusted price-to-equity ratio is at 48.64x. As per NSE data, promoters hold a 33.46% stake in Tata Steel, while public shareholders hold 66.54%.
The latest upside can also be attributable to Tata Steel's update on its acquisition of Angul Energy. It announced on April 19th that the NCLT Bench Delhi has approved the scheme of amalgamation between Tata Steel and Angul. Following this, Angul will be merging with Tata Steel ahead. The merger is a share-swap transaction.
Going forward, Tata Steel's Q4 earnings along with full-year financial performance for 2023-24 will be among the key triggers for its stock price.
Tata Steel India has 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 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.
On NSE, in a month, Tata Steel's share price has zoomed by 11.2%, while in six months, the gain is around 31.52%. YTD, the stock is up by 16%. In a year, Tata Steel is up nearly 50%.
Tata Steel Share Recommendations:
Should You BUY? At the latest, Prabhudas Lilladher recommended ACCUMULATE On Tata Steel's share price, while raising its target to Rs 170. This hints at a 5% potential upside in the near term in Tata Steel. Prabhudas expects Tata Steel's earnings per share to rise from Rs 2.4 FY24E to Rs 13.3 FY25E and Rs 18.6 FY26E. EBITDA is estimated to double to Rs 464 billion by FY26E from an estimate of Rs 220 FY24E. Moreover, the brokerage estimates ROCE to continue to rise from 6.9% in FY24E to Rs 15.2% by FY25E and further to 18.9% in FY26E.
Prabhudas is not alone in expecting a target of Rs 170 per share for Tata Steel. In the near term, JP Morgan and Fisdom have suggested BUY for the target of Rs 170. The next target will be Rs 177 set by Axis Securities, which is also likely possible soon.
But the highest target is set by Jefferies. The brokerage has maintained BUY on Tata Steel while raising its target price to Rs 200 per share. The outlook is positive.
Tata Steel Dividend:
Tata Steel has a strong and consistent track record of paying hefty dividends to its investors. Since its first bonus issue year, Tata Steel has delivered a whopping Rs 299.35 per share to its investors as a dividend to date. In 2023, the company paid a dividend of Rs 3.60 per share. But its highest dividend payout is Rs 51 per share in 2022, the time its share split. In 2022 alone, Tata Steel paid the most dividends of Rs 63.75 per share. Currently, Tata Steel has a dividend yield of 2.18%, also among the top-yielding stocks in the metal sector.
Tata Steel Bonus Issue:
Tata Steel has issued 1 bonus share to its investors in the past. It was in August 2004, that the turned ex-bonus for a bonus ratio of 1:1. Hence, the company paid 1 additional share as a bonus on every existing 1 share held by investors.
Tata Steel Stock Split:
Tata Steel has turned ex-split only once and it was in 2022. The company's 1 equity share having a face value of Rs 10 each was split into ten smaller shares having a face value of Rs 1 each, hence a ratio of 1:10.
Tata Steel Group is among the top global steel companies with an annual crude steel capacity of 35 million tonnes per annum.
Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, 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.
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