It's carnage across the markets as investors continue to sell. Several stocks have fallen to 52-week lows and among these are a few Tata Group names. Let's tell you whether you should buy into these Tata group stocks.
The shares of Rallis India, a Tata group company, hit a new 52-week low of Rs 194 in trade, but, ended at Rs 198. The shares have literally halved in value from 52-week high levels of Rs 362. The company's profitability has remained lower in financial year 2022, one of the reasons for the stock to languish. Rallis India recorded consolidated revenues of Rs 2604 crores for the year ending March 31, 2022, a growth of 7.2% over the previous year. Profit before tax (before exceptional items) was at Rs 222 crores, with a decline of 24% over the previous year's Rs 294 crores. The net profits (after exceptional items) was Rs 164 crores, registering a decline of 28% over the previous year of Rs 229 crores
For the FY 2022, the EPS is Rs 8.44, which discounts the share price of Rs 198 around 21 times. That is neither cheap nor expensive. However, going forward the company is likely to do well on account of a number of initiatives. The company has successfully launched new products in fungicides, herbicides, insecticide, water-soluble fertilizers, biopesticides, organic manure, and hybrids in the seeds category. To reduce dependence on imported intermediates, the Company has developed domestic suppliers for certain items. The shares are also available with a dividend of Rs 3 per share. Given the future prospects, strong pedigree, sharp fall in the share price and reasonable valuations, one can buy this Tata Group company stock.
The shares of Tata Communications fell to Rs 947.25, which is a 52-week low, but has now recovered to Rs 974. For FY 2022, and quarter ending March 31, 2022 the financial performance was pretty good. Tata Communications reported a net profit of Rs 365 crore, up 22 per cent year-on-year. For the full year ending March 31, 2022, the company reported an EPS of Rs 40.96, as against an EPS of Rs 33.78 in the previous year. The shares are trading at a p/e of almost 24 times, one year forward earnings, which is not exactly cheap. The board of the company has also declared a dividend of Rs 20.70 per share. While the shares of the company are not cheap, they do deserve a premium because of the nature of a solid backbone. The company carries around 30% of the world's internet routes and connects businesses to 60% of the world's cloud giants and 4 out of 5 mobile subscribers. Tata Communications capabilities include global network, the world's largest wholly owned subsea fibre backbone and a Tier-1 IP network with connectivity to more than 200 countries and territories.
While this stock may not be at an exact 52-week low, it is almost there. The stock price hit an intra day low of Rs 1108 on Thursday, as against the 52-week low price of Rs 1040. This is a stock that investors can own for a number of reasons. The company has declared a very good dividend of Rs 51 per share and there is a stock split that has also been announced in the ratio of 10:1. The company has had a fantastic year on the back of rising steel prices. It has also managed to reduce its debt. But, the interesting thing of the stock is its valuations. The shares are valued at a p/e of under 4 times, which is unheard of. The company is likely to do well on the back of supply constraints in Europe on account of the ongoing Russia-Ukraine war. This is likely to also lead to robust steel demand going forward. The company has pared its debt, which is a big advantage as far as the company is concerned. All in all, looking at the low p/e valuations, strong dividend yield, and a stock split all this make the stock of Tata Steel a good stock to buy. The shares of the company have also fallen from a 52-week high of Rs 1584. The only worry is if the markets fall, Tata Steel also could see some selling pressure.
Investing in stocks is risky. Please consult a professional advisor before investing in the stock markets. The author and Greynium Information Technologies Pvt Ltd, would not be responsible for losses incurred. Markets over the last few weeks have exhibited tremendous volatility and hence caution is advised.