Tata Steel shares trading flat on YTD basis; what should investors do?

Shares of Tata Steel Ltd have delivered flat returns to investors this year. The Tata Group stock is down 0.17% in 2023 and gained 12% in year. Additionally, the stock has lost 12% from its 52-week high of Rs 134.85 hit on September 18, 2023. The stock movement in the short term signals that the Tata Steel stock is trading in bearish zone. In the current session, Tata Steel shares were trading flat at Rs 118.80 against the previous close of Rs 119.75 on BSE. Tata Steel stock opened higher at Rs 119.95 on Wednesday. During the session, the stock hit an intraday low of Rs 118.55 and an intraday high of Rs 120.45 on BSE.

Market cap of the firm stood at Rs 1.45 lakh crore. Total 10.94 lakh shares changed hands amounting to a turnover of Rs 13.04 crore on BSE. Tata Steel stock fell to a 52-week low of Rs 101.60 on December 26, 2022.  Tata Steel stock has a one-year beta of 1.2, signaling high volatility during the period.

In terms of technicals, the relative strength index (RSI) of Tata Steel stood at 42.4, signaling it's trading neither in the overbought nor in the oversold zone. Tata Steel shares are trading lower than the 10 day, 20 day, 30 day, 50 day, 100 day but higher than the 5 day, 150 day and 200 day moving averages.

Tata Steel shares have rallied 179.26% in three years and risen 105% in five years.

JM Financial has assigned a target of Rs 150 to the Tata Steel stock post Q2 earnings.

"India business reported a marginal decline QoQ in EBITDA/tonne to Rs 13.4 k/t on back of lower realizations, partially offset by lower coking coal cost. Europe continued to report EBITDA loss of $167/tonne vs. loss of $96/tonne in Q1 due to relining of BF in Netherlands. The company reported net loss of Rs 6200 crore after providing for one-off provisioning (UK) of Rs 6800 crore. Net debt during the quarter increased to Rs 77,000 crore (up Rs 5300 crore QoQ) on account of weak performance, "said the brokerage.

Antique Stock Broking has revised downwards its target price after Q2 earnings of the firm were announced.

"The long-term target to reach 40 mtpa by 2030 and to grow downstream portfolio from the current 2 mtpa to 7 mtpa indicates an attractive growth prospect. We maintain BUY rating. We factor in dilution (on account of Tata Steel Long Products merger) and roll over earnings estimate with SoTP-based target price of Rs 137 (earlier Rs 149) per share at an implied 5.6x 1HFY26E EV/EBITDA multiple (earlier 5.9x FY25," said the brokerage.

Axis Securities has assigned a target price of Rs 135 to the Tata Steel stock. However, EBITDA for FY24-26E was revised downwards amid higher coking coal prices and weak Q2FY24 numbers

"We use SoTP and ascribe 1-year Fwd EV/EBITDA multiple of 7.0x, 5.0x, and 4.0x to India standalone, other operations, and Europe respectively on Sep’25 EBITDA (rollover from Mar’25 EBITDA) to arrive at a 1-year forward TP of Rs 135/share (from Rs 145/share). We revise down our EBITDA for FY24-26E on higher coking coal prices and weak Q2FY24 numbers. The target price implies an upside of 14% from the current market price. We maintain BUY," said Axis Securities.

Tata Steel reported a loss of Rs 6,511 crore in the September 2023 quarter against a net profit of Rs 1,297 crore a year ago. The steelmaker’s total revenue from operations came at Rs 55,681 crore against Rs 59,877 crore reported in the year-ago period.

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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