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Tata Steel Limited is an international steel organization reporting its operations from India. It has operations in many sectors, such as steel, ferro alloy, minerals and chrome mining. Apart from steel products, the company also produces ball bearings, hand tools, tubes and steel wires indicating the diversification of the company in the manufacturing industry.
Tata Steel is a part of the Tata Group – one of the largest and most reputed domestic and global companies in India.
As of writing, Tata Steel Limited stock price is at ₹151.33, 1.49% lower than the previous trading day’s closing level. The high and low volumes for the day are ₹150.20 and ₹156.92 and ₹118.80 to ₹184.60 being the 52 weeks high and low respectively.
The number of shares traded in the stock are 67,7959,804 at the moment of writing. This figure was higher than average trading volume of 43,074,692. Tata Steel has a market capitalization of around ₹1.9 trillion. However, the stock still remains active in the market, with a forward dividend yield of 2.36% and its estimated earning date is between January 22nd to 27th 2025.
Tata Steel Limited valuation metrics depicts fairly mixed feelings when it comes to the company’s market outlook as of November 6th 2024. The current market capitalization of the company is around ₹1.9 trillion and the enterprise value is ₹2.80 trillion. The trailing P/E is high at 64.55, but then consumers may be expecting improved future growth.
The price-to-sales ratio that stands at 0.86 means that the stock is cheap with an attached multiple of its revenue. Finally, there’s the price to book ratio whereby the current market price is divided by the book value per share to give a value of 2.13 meaning that the stock market is actually placing a premium on the company’s stock than the actual book value of the stock.
Analyzing other ratios which are enterprise value to revenue ratio of 1.27 and enterprise value to EBITDA ratio of 10.81 provides an understanding of the company’s valuation against its actual revenues or EBITDA.
The prognosis of the financial performance of Tata Steel defines some problems connected with the organization’s profitability. The firm has -1.83 % profit margin which shows operating problems or have incurred odd-time expenses. Till the twelve month period ending June 2020, the revenues of Tata Steel were ₹2.24 trillion while the net income attributable to the common equity shareholders was a negative ₹-41.12 billion and the diluted EPS was negative ₹-3.40.
On the balance sheet of the company, it shows the total cash of ₹78.12 billion with some liquidity position. However, Tata Steel still has a comparatively higher dependence on debt which is shown by the debt to equity ratio of 94.21% which means the company uses debt as the source of its funds a lot.
In new developments, Tata Steel has signed a contract with Italy's Tenova to install an electric arc furnace at its Port Talbot plant in Wales. This comes shortly after the plant's last blast furnace was shut down, marking the end of blast furnace-based production at what was once Europe's largest steelworks.
The closure is part of the broader decline of the UK's steel industry, which has faced increasing challenges from low-cost imports. The Port Talbot plant will undergo a 3 to 4 year decarbonization process, which includes the development of the new electric arc furnace capable of producing steel from scrap metal.
The £1.25 billion (approximately $1.68 billion) project is supported by £500 million in government funding. Once operational in late 2027, the electric arc furnace is expected to cut the plant's carbon emissions by 90%, reducing emissions by 5 million tonnes of CO2 annually.
Tata Steel has completed the public consultation for the planning application and is working with local authorities to submit it in November 2024, with plans to begin site preparations in July 2025.
Year-to-Date (YTD) Return: Tata Steel: +11.42% compared to the S&P BSE SENSEX: +10.29%
1-Year Return: Tata Steel: +30.27% compared to S&P BSE SENSEX: +22.66%
3-Year Return: Tata Steel: +172.52% compared to S&P BSE SENSEX: +32.65%
5-Year Return: Tata Steel: +837.06% S&P BSE SENSEX: +96.88%
Outperformance: It emerges clearly that Tata Steel surpasses the benchmark index – the S&P BSE SENSEX – in each of the periods indicated; it also reveals that it has been growing more robustly over the 3-year and 5-year horizons.
Long-Term Growth: Based on the above mentioned statistics, there is a lot of growth potential indicated by the 5-year return of 837.06% as compared to SENSEX which returned 96.88% during the same period.
Consistent Returns: Thus, Tata Steel returns appear more preferable independent of the period under consideration exceeding the benchmark rate and indicating higher short- and long-term investment growth rates.
Tata Steel has been in a bullish trend on the weekly chart. It traded bullish to an all-time high of ₹184.60 that was reached in June. Since then, the stock has been facing a bearish phase but has found support consistently at the ₹145 level on two separate occasions. This strong support shows and suggests that we may have a limited downside move, and that the stock could be set for a recovery. Only if this support holds.
Given the technical outlook and key levels, Tata Steel is expected to experience a bullish reversal. Its next resistance and target level could be aiming towards its recent high of ₹168. And if the stock maintains its uptrend, it could target the all-time high of ₹184.60 soon.
Above that level, the psychological level of ₹200 is a likely area of interest for traders, marking a critical resistance level if the bullish trend continues. Key support remains at ₹145, with resistance at ₹168 and ₹184, making these levels crucial in determining the future direction of the stock.
As it stands the company remains strong amidst stiff market competition. This has been evident by its strategic initiatives to redesign its organizational layout to accommodate a shift towards more sustainable production of steel. One strategic transformation by Tata Steel which remains underway is converting from the blast furnaces at its Port Talbot site to an electric arc furnace – a major element in the company’s decarbonization process that enjoys considerable governmental support.
Despite recent bearish trends, Tata Steel’s technical analysis suggests a recovery, with potential for a strong upward move toward past highs and beyond. Given its diversified operations, commitment to sustainability, and market presence, Tata Steel is well-positioned for long-term growth, with optimistic price targets for the coming years.
