Tata Steel share price has touched a new all-time high, crossing over Rs 170 mark. With that, Tata Steel has met target of many brokerages. As the second phase of polling of Lok Sabha Election 2024 kicks starts from April 26th onward, Tata Group's 116-year-old steelmaker, Tata Steel is an attractive bet. This steel stock received a short-term buy call from Prabhudas Lilladher for buying on Friday for a target price of Rs 177. The next big event in Tata Steel is its Q4 earnings after robust production numbers in the last quarter of FY24.
Tata Steel Share Price:
At the time of writing, Tata Steel share price traded at Rs 170 apiece, up by 1.43% on BSE with market cap of Rs 2,11,719.19 crore. In the opening bell, Tata Steel touched a new all-time high of Rs 170.70 apiece. In the pre-market opening of Friday, Tata Steel's share price traded at Rs 167.65 apiece, broadly flat compared to the previous day's closing price.
On April 25th, Tata Steel's shares stood at Rs 167.60 apiece, this is very close to its 52-week high of Rs 169.75 apiece. Its market cap currently is at Rs 1,38,169.24 crore.
Tata Steel shares are among the top gainers of 2024 in the metal sector. Tata Steel stock rallied by 20% on BSE year-to-date. In a year, the stock has gained by a whopping 57%. Tata Steel has become a multi-bagger with gains of over 207.5% in 5 years. While the stock's all-time gains are a whopping 1,186.26% as of now.
Tata Steel's Latest Announcement:
In its regulatory filing, Tata Steel announced that following 7 months of formal and informal national-level discussions with the UK trade unions, Tata Steel will proceed with its £1.25 Billion investment to build a state-of-the-art Electric Arc Furnace in Port Talbot and commence closure of the existing heavy end assets in the following months.
It added, that the transformation will represent the single largest investment in UK steelmaking in decades, safeguard its long-term future, and secure 5,000 jobs directly at Tata Steel, whilst creating more indirect jobs in engineering and construction and reducing CO2 emissions by 5 million tonnes each year.
Tata Steel's CEO and Managing Director, T V Narendran said: "Having looked carefully at all the options over the past seven months in consultation with union representatives, we have decided to proceed with our proposed restructuring and transition. This is the most viable proposal, in contrast to the unions' unaffordable plan which has high inherent operational and safety risk."
He added, "Our proposal secures a long-term future for the business and preserves the majority of jobs in the UK. We will continue to work with the trade unions over the following 2 weeks to agree on a memorandum of understanding on the future of the UK business and the impact on our people. Tata Steel is committed to creating a low-CO2 steel business at the heart of a green industrial ecosystem in Wales and the wider UK to safeguard steel supplies and create economic opportunities for generations to come."
As part of the detailed analysis, the company and the unions' adviser reached a common conclusion that this plan would involve significant additional costs of at least £1.6 billion (including higher operating costs and higher capital expenditure).
Additionally, the UK Steel Committee representatives who visited the site, that building a new electric arc furnace while continuing to operate the existing steel melting shop is high-risk and complex and will delay the transition by two years.
Prabhudas Lilladher Raises Target On Tata Steel:
Shiju Koothupalakkal - Technical Analyst at Prabhudas Lilladher has like Tata Steel to buy on April 26th. The analyst has recommended a stop loss of Rs 164 for a target price of Rs 177.
Earlier, Prabhudas has set a target price of Rs 170 on Tata Steel. The latest target is for a short-term basis such as intraday or at maximum 1-week target. Nonetheless, Tata Steel is expected to touch the Rs 177 target either on April 26 or in the coming days.
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.
In Q4FY24, Prabhudas expects Tata Steel to report ~2.7% QoQ decline in NSR at TSI; volumes grew 11% QoQ to 5.41mt; EBITDA/t to see decline of Rs2,917 QoQ to ~Rs14,000. TSE contribution to improve QoQ on higher volumes from TSN & higher NSR at TSUK; expect TSE EBITDA loss of ~USD 78/t.
The highest target is set by Jefferies and Progressive Share. Jefferies has maintained BUY on Tata Steel while raising its target price to Rs 200 per share. The outlook is positive. While Progressive Share recommends a target of at least Rs 214.
Tata Steel Dividend:
This Tata Group company 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:
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 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.
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