1:2 Bonus, 1:10 Split: Tata's Dividend Steel Stock, GDR Up 16-17% YTD; 4 Tata Firms Win Big; Book Profits?

Steel-making behemoth, Tata Steel is trending and will be in focus during the trading week from April 8th to 13th after it posted the highest-ever crude steel production for Q4FY24. So far 2024 has been fruitful for Tata Steel investors as the company's stock rose by nearly 17% on BSE. With this latest upside, 4 listed Tata stocks also win big. But Tata Steel shares are near their all-time highs, does that indicate a periodic correction and profit-booking?

On April 5th, Tata Steel shares were at Rs 163.35 apiece, broadly flat on BSE with a market cap of Rs 2,03,917.04 crore. The stock is near its 52-week aka record level of Rs 166.30 apiece, while it is trading up by 57% from its 52-week low of Rs 104.10 apiece.

Meanwhile, apart from being listed on the Indian stock exchanges BSE and NSE, Tata Steel also has a global depositary receipt (GDR) listed in London.

Tata Steel's GDR is currently at $19.50, also nearing its 52-week high of $19.60.

What are GDRs? As per Deutsche Bank's website, Global Depositary Receipts (GDRs) give access to two or more markets, most frequently the US market and the Euromarkets, with one fungible security. GDRs are most commonly used when the issuer is raising capital in the local market as well as in the international and US markets, either through private placement or public offerings.

YTD, Tata Steel shares have zoomed by 16.76% on BSE. Meanwhile, its GDR has surged by 16.07% so far in the current year.

Four listed companies backed by Tata Group benefit massively from Tata Steel's double-digit performance YTD. These are Tata Motors, Tata Investment Corporation, Tata Chemicals, and Titan Company.

How much they gain so far in 2024 by holding Tata Steel shares? Find Out!

On January 1, 2024, Tata Steel shares were at Rs 139.90 apiece.

1. Tata's auto giant, Tata Motors holds 5,49,62,950 equity shares or 0.44% in Tata Steel as of December 31, 2023. At the start of January, Tata Motors' shareholding was valued at Rs 768.93 crore. Now, it has risen to Rs 897.82 crore.

2. The next up is Tata Investment Corporation which holds 4,19,84,940 equity shares or 0.34% in Tata Steel. Tata Investment's holding is now valued at Rs 685.82 crore in Tata Steel, compared to Rs 587.36 crore at the start of the year.

3. Further, Tata Chemicals holds 3,09,00,510 equity shares or 0.25% in Tata Steel. The Tata Group's saltmaker's shareholding is now valued at Rs 504.76 crore compared to the value of Rs 432.29 crore at the start of the year.

4. Even, Tata's gems & jewellery giant Titan Company has a portion of Tata Steel in its portfolio. This has risen to Rs 41.01 lakh from Rs 35.13 lakh at the start of January 2024.

Trends in Tata Steel:

The latest key factor to influence Tata Steel shares is its Q4 update. The company 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.

Tata Steel's Corporate Affairs:

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

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%.

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

Buy Or Sell Tata Steel?

Analysts have mixed stances on Tata Steel shares. The latest recommendation is made by Incred Equities where it has maintained 'REDUCE' on Tata Steel shares for a target price of Rs 82. According to this brokerage, the steel market is likely to experience sustained downward pressure ahead, which is likely to result in no improvement in steel spreads. Hence, it kept a 'REDUCE' rating due to a higher P/E multiple in Tata Steel.

Also, at the latest Prabhudas Lilladher has recommended ACCUMULATE on Tata Steel, but cut its target price to Rs 134 per share. Moreover, Kotak Institutional Equities has further suggested REDUCE with a lower target price of Rs 140 apiece.

On the other hand, 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.

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.