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In mid of this year, the Tata Steel company split the share by 1:10 and due to that, it attracted a lot of retail investors as the price of the stock came down. The Tata Steel Share Price came to a level that was very attractive for retail investors, especially beginners and investors with limited funds. As of 28.12.22, the last trading price of Tata Steel was Rs. 110. In this post, we will discuss whether this is the right time to invest in the stock. Read the article up to the last to know everything in detail.
About Tata Steel Company
Tata Steel Limited is an Indian multinational steel-making company, based in Jamshedpur, Jharkhand, and headquartered in Mumbai, Maharashtra. It is a part of the Tata Group. Tata Steel Ltd is Asia’s first integrated private steel company set up in 1907.
The company has a presence across the entire value chain of steel manufacturing from mining and processing iron ore and coal to producing and distributing finished products.
Tata Steel group is among the top global steel companies with an annual steel production capacity of ~34 million tonnes per annum (MTPA). The company has a target to increase domestic steelmaking capacity to 30 MnTPA by 2025. It is one of the world’s most geographically diversified steel producers, with operations and commercial presence across the world. Since 2016, Tata Steel has been consistently ranked among the top ten steel companies in the DJSI Corporate Sustainability Assessment.
Fundamental Analysis of Tata Steel
Market Capitalization of Tata Steel
The current Market Capitalization of Tata Steel is 1,34,344 crore. This is the second highest (after JSW Steel) among its peers. So, Market Cap. wise this is a large-cap company.
Sales Growth of Tata Steel
Tata Steel is consistently increasing its sales. For the last 3 years, the company’s sales growth rate is 15.7%, while for the last 5 years, the sales growth is 16.8%. This looks very promising. In March 2022, Tata Steel posted a year-on-year sales growth of 55.90%.
Profit of Tata Steel
Recently, Tata Steel posted a consolidated profit of Rs 1,195.20 crore, which was almost 89 percent less year-on-year (YoY) and the consolidated revenue stood at Rs 60,206.78 crores which is 5.48% percent less than the last quarter.
Return on Equity (ROE) of Tata Steel
The ROE of Tata Steel is 42.60. This means, on every 100 rupees you put in Tata Steel, it earns 42.60 Rs. This figure is really very attractive.
Tata Steel P.E. Ratio
The current PE ratio of Tata Steel is 4.68, which is far below that its 5 years historical PE of 5.84. Hence, P.E. wise the stock seems very attractive.
Other Fundamental Specifications
- The cash flow of Tata Steel is increasing year on year basis.
- 75% of Tata Steel Shareholders are Promoters, FII, & DIIs.
- Tata Steel is trading at 113% of its Book value.
Debt to Equity Ratio of Tata Steel
Though the other fundamental parameters of Tata Steel are very promising, the Debt-to-Equity Ratio is concerning which is at 0.81%.
Technical Analysis of Tata Steel
The Tata Steel stock has created a support level of around 110 and for the last few days, the stock is trying to go upwards. Indicators like Bollinger Band are giving a bullish signal on the stock.
The fundamentals indicators of Tata Steel are very promising except Debt-to-Equity Ratio. However, it is to be noted here that Tata Steel is a capital incentive company and it needs to take a lot of loans to run its businesses. Hence, as long as the company is making profits, Tata Steel seems to be in no danger.
International brokerage firm JM Financials gave a Buy call on Tata Steel with a target price of Rs 125 per share, implying an upside of over 13.63 percent. On the other hand, ICICI Direct in its research report has also recommended accumulating the stock with a target price of Rs 125.
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Disclaimer: – The name of the stock mentioned in this article is purely for Educational purposes. It should not be considered as Buying/Selling recommendations. The owner/author of this blog will not be held responsible for any kind of loss made after reading this article.