Tata Steel shares deliver single-digit returns in 2023; time to buy, sell or hold?

Shares of Tata Steel Ltd have delivered flat returns in 2023. The Tata Group stock is up nearly 5% from their December 31 level last year. Apart from the year-to-date returns, Tata Steel stock has lost 4.65% in two years, leaving investors guessing about the outlook of the scrip. However, the metal stock has delivered multibagger returns of 228% in the last three years.

In the current session, the Tata Group’s metal stock was trading flat at Rs 125.50 against the previous close of Rs 128.85 on BSE. Total 11.82 lakh shares of the firm changed hands amounting to a turnover of Rs 14.80 crore. Market cap of the Tata Group firm stood at Rs 1.53 lakh crore in the afternoon session. The stock has a beta of 1.2, indicating high volatility in a year.

In terms of technicals, the relative strength index (RSI) of Tata Steel stands at 46.6, signaling it's neither trading in the overbought nor in the oversold territory. Tata Steel shares are trading higher than the 50 day, 100 day, 150 day and 200 day but lower than the 5 day, 10 day, 20 day and 30 day moving averages.

Here’s a look at what technical analysts and brokerages said on the outlook of the Tata Group stock.

Incred Equities has a reduce call on the stock with a target price of Rs 70.

In a bear case scenario, the brokerage said, "With high inflation and rising interest rates, the Western world will see steel demand destruction, leading to a massive destocking-led fall in prices."

"In the foreseeable future, the steel market is likely to experience sustained downward pressure, resulting in no improvement in steel spreads. We value Tata Steel at 0.7 times FY23F BV to arrive at a target price of Rs 70. Retain REDUCE rating on it," added the brokerage.

Pravesh Gour, Senior Technical Analyst at Swastika Investmart is of the view that one can hold Tata Steel for a target price of Rs 142. Stop loss of Rs 123 should be fixed.

"Tata Steel witnessed a breakout of a triangle formation on the daily chart. It retested its previous breakout and started a new leg of rally towards Rs 135 level. The overall structure looks good for short-term trade as it is trading above its key moving averages. On the higher side, Rs 135 is the susceptible level; above this, Rs 142 is the near-term target for the counter. Place a stop-loss at Rs 123," said Gour.

Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher expects Tata Steel stock to hit the target of Rs 150 level.

"Tata Steel stock has resistance near Rs 135 zone and it's cooling off to some extent with near-term support at Rs 123 level. A decisive breach above Rs 135 zone shall trigger a breakout with next expected target of Rs 145-150 levels," said Parekh.

 ICICI Securities has maintained an add call to the stock with a target price revision to Rs 150 from the earlier Rs 135.

"The development around Tata Steel UK is likely to ensure the future readiness of the business from both profitability and ESG perspective. We expect both additional restructuring costs  and  policy  support  as  consultation  process  picks  up. Taking cognizance of  better  operating  prospects  of  Tata  Steel UK and  reduced  support  from  the parent, we raise our valuation multiple to 6x (earlier 5.5x),resulting in a revised target price of Rs 150 (earlier Rs 135). Maintain ADD rating on Tata Steel stock,” the brokerage said.

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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