1:10 Split, Rs 299/Sh Dividend; Lakhpati Stock, Tata's Steel Up 16% YTD; Buy Before Q4, Highest TP Over Rs 210

Tata Group-backed steel giant, Tata Steel with over Rs 2 lakh crore market cap, has been resisting its major brokerages' target of the Rs 170 mark despite emerging among top performers on the metal index. The technical indicators of Tata Steel are broadly steady and hinting a bullish trends, however, this metal heavyweight stock is still fractionally away from its pivot point with resistance between Rs 163.87 to Rs 167.07 and support levels from Rs 160.67 to Rs 157.47.

Chances are that Tata Steel may see a fruitful bull run amidst its Q4 earnings announcement as it is a top pick of Axis Securities for the sector ahead of the Q4 earnings report of the company.

On NSE, Tata Steel's share price is at Rs 162.10 apiece with a market cap of Rs 2,02,357.98 crore. Tata Steel has been hovering closer to its 52-week high levels of Rs 169.80 apiece. Its price-to-equity ratio is at 49.29%, as per the exchange data.

Last week, Tata Steel witnessed a broader bullish trend which can be attributable to the company 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

YTD, Tata Steel's share price has zoomed by 16% on BSE.

Tata Steel is most likely set to announce its Q4 earnings in May. Investors will also look for any dividend payout.

Tata Steel's production and deliveries have been robust. It 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.

Tata Steel is among the top dividend-paying metal stocks and has in the past carried bonus share and stock splits.

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. But since its first bonus issue which was in August 2004, Tata Steel had paid up to 299.35 per share to its investors.

Coming to the bonus issue, the company has issued bonus shares in the ratio of 1:1 with a record date set in August 2004.

In its post-pandemic era, Tata Steel 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.

Adjusting to its stock splits, bonus shares and dividends to date, Tata Steel shares all-time gains are a whopping 2,232.37% so far, making it a lakhpati-making stock. Tata Steel's share price was at Rs 6.95 on January 1, 1999.

If any investor bought shares of Tata Steel for Rs 1 lakh, 25 years ago, their corpus is now worth over Rs 23.32 lakh. The returns on their Rs 1 lakh investment is about Rs 22.32 lakh in this period.

Brokerages like Fisdom, Jefferies and Prabhudas Lilladher have set a target price of Rs 170 with a BUY or Accumulate stance on Tata Steel. However, Prabhudas also has a higher target of Rs 184 levels.

Meanwhile, with the underlying bias remaining positive, StoxBox has suggested that if Tata Steel breaks out from its Rs 170 zone then the next big potential target is of Rs 200 level. However, if the stock falls below Rs 160, the brokerage expects more selling pressure.

Further, LKP Securities analyst has stated earlier that Tata Steel's RSI has provided a buy crossover, further hinting the bullish undertone. The brokerage has set a Rs 200 target price.

But Tata Steel is more than that. Progressive Shares analyst highlighted that Tata Steel's breakout pattern signals a target of Rs 214, which is the highest by brokerages on this Tata Steel stock.

Keeping Tata Steel among its top picks in the metal index, Axis Securities said, "We anticipate Tata Steel India's EBITDA/t to decline by 9%/15% YoY/QoQ, primarily due to lower realizations and higher coking coal consumption costs, partially offset by increased operating leverage. In Europe, we expect the EBITDA/t loss to
narrow down to $112/t from $178/t in Q3FY24, driven by higher sales volume in Europe and improved realizations, particularly in the UK."

Moreover, Axis Securities report added, " Tata Steel India's sales volume
increased by 0.53MT QoQ to 5.41MT, reflecting a seasonally strong quarter. In Europe, sales volume grew by 0.15MT QoQ to 2.09MT, attributed to the restart of BF6 at the Netherlands following relining completion in early Feb'24, along with improved sales
performance in the UK compared to the seasonally weak Q3FY24. Consolidated sales volume increased by 0.75MT QoQ to 7.82MT."

Axis' note added, "Tata Steel India's sales volume increased by 0.53MT QoQ to 5.41MT, reflecting a seasonally strong quarter. In Europe,
sales volume grew by 0.15MT QoQ to 2.09MT, attributed to the restart of BF6 at the Netherlands following relining completion in early Feb'24, along with improved sales
performance in the UK compared to the seasonally weak Q3FY24. Consolidated sales volume increased by 0.75MT QoQ to 7.82MT."

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