Owing to its narrowing of losses in Europe business and growth capex on track, has made brokerage JM Financial optimistic on Tata Group-backed steel giant, Tata Steel. This metal stock has been resisting around Rs 165-170, and JM Financial believes that it could rise to Rs 180 in the short term. Tata Steel will be in focus ahead for its powerpack developments including 360% dividend payout, Rs 3,000 crore additional fundraising, and investment of a whopping Rs 17,407 crore in subsidiary.
Tata Steel Share Price:
Tata Steel exited May month at Rs 167.15 apiece, with a market cap of Rs 2,08,660.74 crore on BSE. However, on month-on-month basis, the stock's performance is broadly flat due to volatility.
But, YTD, Tata Steel is among top gainers with the upside of nearly 20%. In a year, Tata Steel stock is nearly up 58%.
JM Financial On Tata Steel:
Explaining key takeaways from Tata Steel's earnings, JM Financial highlighted that --- 1) UK operations witnessed a one-off gain of 51mn pounds on account of carbon credits 2) Expected coking coal price movement in 4Q (a) India: (-)USD10/t (b) Netherlands: (+) USD 24/t (c) UK iron ore: (+) USD10/t 2) Expected net realisation movement in 4Q: (a) India (+) INR3k/t (b) Netherlands: flat (c) UK (+) £90/t 3) Netherland ops is expected to be EBITDA positive by 1QFY25 4) The company endeavours to cut UK losses by half in FY25E - EBITDA positive by 3Q 5) Kalinganagar phased commissioning started with additional 0.7 mt volume expected in FY25E 6) Management endeavour is to make transition to EAF within 4 years.
On the valuation, JM's note said, "Spot steel spreads have improved domestically driven by a sharp reduction in coking coal prices. Maintain BUY." The target price is set at Rs 180.
Tata Steel Dividend:
The steel giant has declared a dividend of Rs 3.60 per share having a face value of Re 1 each for FY24. In percentage terms, the payout would be 360%.
According to Tata Steel's regulatory filing, the dividend recommended by the Board of Directors of the Company is subject to the approval of the shareholders at the ensuing Annual General Meeting (AGM) of the Company scheduled to be held on Monday, July 15, 2024.
Further, the company added that if approved by the shareholders at the AGM, will be paid, subject to deduction of applicable tax at source, on and from Friday, July 19, 2024. Accordingly, the company fixed Friday, June 21, 2024, as the Record Date for determining the Members entitled to receive the dividend.
Notably, this dividend payout is similar to other corporate actions, 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.
Read more at: https://www.goodreturns.in/personal-finance/1-10-split-rs-299-sh-dividend-buy-tatas-tata-steel-stock-for-24-gains-dividend-q4-ncds-plan-in-focus-1349137.htmlRs 3.60 apiece or 360% paid in FY23. 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. 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.
Coming to the 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.
Apart from this, 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 NCDs:
Additionally, Tata Steel is all set to raise additional debt securities, in one or more tranches, up to Rs 3,000 crore via non-convertible debentures (NCDs) on a private placement basis.
Earlier in March month, Tata Steel raised funds to Rs 2,700 crore via NCDs.
Tata Steel Investment:
Coupled with dividends and additional fundraising, Tata Steel has also received board approval for infusing funds up to USD 2.11 Billion (Rs 17,407.50 crore), by way of subscription to equity shares of T Steel Holdings Pte. Ltd (TSHP), a wholly owned foreign subsidiary of the Company, in one or more tranches, during FY2024-25.
Also, the company will convert debt instruments aggregating to USD 565 Million (Rs 4,661.25 crore) held by the Company in TSHP into equity shares, during FY2024-25. The Company will continue to hold these converted equity shares.
Tata Steel Earnings:
Consolidated Revenues for the Jan - March 2024 quarter stood at Rs 58,687 crores, up 6% QoQ on improved volumes across geographies. EBITDA was at Rs 6,631 crores with an EBITDA margin of ~11%.
On the other hand, PAT dropped sharply to Rs 3,856 crore, from Rs 4,429 crore in Q3FY24. Net debt stands at Rs 77,550 crore.
For FY24, Tata Steel's consolidated revenues were at Rs 2,29,171 crores. EBITDA stood at Rs 23,402 crores and has been primarily driven by improved performance in India operations. Also, the company has spent Rs 4,850 crores on capital expenditure during the quarter and Rs 18,207 crores for the full year. The phased commissioning of the 5 MTPA expansion at Kalinganagar is progressing.
The company's UK business annual revenues were £2,706 million and the EBITDA loss stood at £364 million. Liquid steel production was 2.99 million tons while deliveries stood at 2.80 million tons. For the quarter, revenues were £647 million and EBITDA loss stood at £34 million.
Moreover, Tata Steel's Netherlands business' annual revenues were £5,276 million and EBITDA loss stood at £368 mn, largely due to the reline of BF6 which was completed in early February. Liquid steel production was 4.81 mn tons and deliveries were 5.33 mn tons. For the quarter, revenues were £1,324 mn and EBITDA loss was at £27 mn.
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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