[Infographics] Tata Steel | 7 Fundamental Clarifications On Tata Steel

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. The company has a target to increase domestic steelmaking capacity to 30 MnTPA by 2025.

Product Portfolio

The company offers a broad range of steel products including a portfolio of high-value-added downstream products such as hot rolled, cold rolled, coated steel, rebars, wire rods, tubes, wires, etc.

Geographical Revenue Breakup

Presently, India accounts for ~51% of revenues, followed by Europe excl. UK (26%), UK (9%), Asia excl. India (7%) and other regions (7%).

Share of Revenue from Value Added Products

Over 50% of the company’s sales are in the value-added product categories which help it fetch higher realizations and support its profitability.

Global Presence

The company has a wide international footprint. It has operations spread across 26countries and a commercial presence in 50 countries.

Captive Sourcing of Raw Material

The company owns leases to various captive mines that meet 100% and 30% requirements of the company’s ion ore and coking coal needs respectively.

Many competitors do not have the same captive sources that give the company an edge over its peers.  Its captive iron ore mines are collieries are located near its manufacturing facilities in Jamshedpur and Kalinganagar.

Manufacturing Capabilities

Presently, the company has a total crude steel capacity of ~33 MnTPA :
India
a. Jamshedpur – 12 MnTPA
b. Kalinganagar – 3 MnTPA
c. Tata Steel BSL – 5.6 MnTPA

The capacity at Jamshedpur includes 1 MnTPA alloy-based manufacturing capacity in long products at Jamshedpur which was acquired by Tata Steel Long Products Ltd (subsidiary) from Usha Martin Ltd.

Europe
Ijmuiden, Neatherlands – 7.3 MnTPA
Port Talbot, UK – 5.1 MnTPA

Material Acquisitions

In 2018, the company completed the acquisition of a 72.65% stake in Bhushan Steel Ltd through the Insolvency and Bankruptcy Code (IBC).

The company paid ~159 crores for the 72.65% stake and provided additional funds aggregating to ~35,000 crores by way of debt/ convertible debt.

In 2019, the company’s subsidiary Tata Steel Long Products acquired steelmaking assets of Usha Martin Ltd including captive power plants for ~4,000 crores.
The acquisition involved UML’s 1.0 MnTPA specialty steel plant in Jamshedpur that makes alloy-based long products, a functional iron ore mine, a coal mine under development, and captive power plants.

In 2007, the company completed the acquisition of Corus Group plc for ~12 billion USD. Corus was 2nd largest steel producer in Europe at that time.

Unstable International Operations

The company has been reporting low and volatile profitability from the European and South-East Asian operations.
It is also under negotiations to sell its south-east Asian steel business, the business is classified as discontinued operations.

The company was in talks with ThyssenKrupp AG to form a JV to combine their steel business in Europe. However, the European Commission evaluated the arrangement and then prohibited the proposed JV.

Reorganization

The company is reorganizing its India business into four clusters with a view to simplifying its corporate structure.
It transferred half of the stake of 2 of its subsidiaries to Tata Steel Downstream Products Ltd which is another wholly-owned subsidiary of the company.

Plans for Amalgamation

The company approved the amalgamation of Bamnipal Steel Ltd and Tata Steel BSL Ltd in 2019 with the company by way of a composite scheme of Amalgamation.

The company has also received no-objection certificates regarding the amalgamation from BSE and NSE and has filed an application to NCLT, Mumbai Bench for necessary directions.

Tata Steel Today

TATA STEEL LTD
TATASTEEL.NS
₹ 1,319.50
-0.056807425%
Marketcap
1.61T
Volume
₹ 4,491,404.00
Shares
1,221,539,968
Range
₹ 1,315.00 - ₹ 1,346.00
52 Week Range
₹ 860.00 - ₹ 1,534.50
TATA STEEL LTD
sector
Basic Materials
industrySteel
addressBombay House, Mumbai, India
countryIndia
phone91 22 6665 8282
websitehttps://www.tatasteel.com
TATA STEEL LTD
₹ 1,319.50
Open ₹ 1,334.95
High ₹ 1,346.00
Marketcap 1.61T
Close ₹ 1,319.50
Low ₹ 1,315.00
Volume ₹ 4,491,404.00

Tata Steel Chart

Tata Steel Index presence

NIFTYALPHANIFTY100WEIGHTNIFTYEQWGTNIFTY100NIFTY50
NIFTYLGEMID250NIFTY200NV20NIFTYCDTYLIQ15
NIFTYDIVOPPTNIFTY500VAL50NIFTYTATANIFTYTATA25NIFTYHIGHBETA
NIFTY100ALP30SENSEXBSE500METALSNSX50
BSE100BSE200LMI250ALLCAPLRGCAP
BSE100LARGECAPTMCBASMTRGREENEXCARBONEXSPBSMOIP
SPBSQIPMFGSPBSEVIPESG100S&P LARGEMIDCAP

Tata Steel Infographics

Tata Steel Infographics
Tata Steel Infographics by Kamlesh Rode, created in Figma.com

Tata Steel Overview

Tata Steel Infographics - overview
Tata Steel Infographics – overview

Key takeaways

  • PE ratio of Tata Steel is 17.24 and its sector PE is 23.46 which is very good.
  • This stock high return as compare to Bank FD.
  • This stock has PB ratio of 1.67 and sector PB is 3.01.
PE RatioSector PEPB RatioSector PBDividend YieldSector Div Yld
17.2423.461.673.012.33%1.63%

Read more about PE ratio with infographics | Read more about dividend and dividend yield with infographics

Financials of Tata Steel

Tata Steel Infographics - Financials
Tata Steel Infographics – Financials

Income Table

Financial YearFY 2018FY 2019FY 2020FY 2021
Total Revenue1,38,399.021,59,494.401,51,184.661,57,690.66
EBITDA32,331.6030,842.5314,907.9530,684.04
PBIT26,589.9023,500.706,200.2821,450.40
PBT21,135.1615,840.60-1,380.4413,843.69
Net Income13,434.3310,218.331,556.547,490.22
EPS120.9384.9212.9462.21
DPS10131025
Payout ratio0.080.150.770.4
EPS and DPS in ₹. Other numbers except for Payout Ratio in ₹ cr

Income Statement

Lower than Industry Revenue Growth

Over the last 5 years, revenue has grown at a yearly rate of 7.61%, vs industry avg of 8.94%

Decreasing Market Share

Over the last 5 years, market share decreased from 32.85% to 31.55%

Balance Sheet Table

Financial YearFY 2018FY 2019FY 2020FY 2021
Current Assets67,877.1658,990.9858,732.7260,211.90
Non Current Assets1,40,844.981,73,782.461,90,416.401,83,697.29
Total Assets2,08,722.142,32,773.442,49,149.122,43,909.19
Current Liabilities55,661.4161,034.1361,660.9170,867.13
Non Current Liabilities91,233.621,00,436.461,11,325.3195,533.61
Total Liabilities1,46,895.031,61,470.591,72,986.221,66,400.74
Total Equity61,827.1171,302.8576,162.9077,508.45
Total Liabilities & Shareholder’s Equity2,08,722.142,32,773.442,49,149.122,43,909.19
Total Common Shares Outstanding120.33120.33120.33120.45
Shares outstanding numbers in cr. Other numbers in ₹ cr

Balance Sheet

Lower than Industry Debt to Equity Ratio

Over the last 5 years, the debt to equity ratio has been 156.16%, vs industry avg of 172.17%

Higher than Industry Current Ratio

Over the last 5 years, the current ratio has been 100%, vs industry avg of 79.15%

Cash Flow Table

Financial YearFY 2018FY 2019FY 2020FY 2021
Net Change in Cash2,933.02-4,513.204,462.04-2,200.26
Changes in Working Capital-12,163.75-2,503.712,090.2915,786.99
Capital Expenditures7,478.509,091.0010,398.006,978.59
Free Cash Flow544.8916,244.959,770.7237,348.09
All numbers in ₹ cr

Cash Flow Statement

Higher than Industry Free Cash Flow Growth

Over the last 5 years, free cash flow growth has been 95.98%, vs industry avg of 67.44%

Peers of Tata Steel

Tata Steel Infographics - Peers
Tata Steel Infographics – Peers
StockPE RatioPB RatioDividend Yield
Tata Steel Ltd17.241.672.33%
JSW Steel Ltd19.563.351.27%
Steel Authority of India Ltd10.60.972.63%
Jindal Steel And Power Ltd9.261.2

Key takeaways

  • JSW Steel have highest PE ratio of 19.56
  • JSW Steel have highest PB ratio of 3.35

Read more about PE ratio with infographics and Dividend infographics

Tata Steel Shareholdings

Tata Steel Infographics - Shareholding
Tata Steel Infographics – Shareholding

Promoter Holdings Trend

Total Promoter Holding

In last 6 months, promoter holding in the company has almost stayed constant

Low Pledged Promoter Holding

Pledged promoter holdings are insignificant

Institutional Holdings Trend

Mutual Fund Holding

In the last 3 months, the mutual fund holding of the company has almost stayed constant

Foreign Institutional Holding

In the last 3 months, foreign institutional holding of the company has almost stayed constant

InvestorsDec-18Mar-19Jun-19Sep-19Dec-19Mar-20Jun-20Sep-20Dec-20Mar-21Jun-21Sep-21
Promoters 33.1233.1233.1233.1233.1234.4134.4134.4134.4134.4134.4134.41
FIIs 15.0514.613.7913.6515.3412.3911.8411.4516.8718.5621.9422.38
DIIs 29.0329.0630.2630.1329.2729.6629.7929.8725.8425.1619.2818.28
Government 0.110.110.110.110.20.220.220.250.250.250.10.1
Public 22.6923.1122.7222.9922.0823.3223.7324.0222.6221.6224.2724.83

Tata Steel Dividend/Split

Tata Steel Infographics - Dividend/split
Tata Steel Infographics – Dividend/split

Read more about dividend and dividend yield with infographics

Strength and Limitations

Strength

  • The company has shown a good profit growth of 48.33% for the Past 3 years.
  • The company has significantly decreased its debt by 13,074.57 Cr.
  • The Company has been maintaining an effective average operating margins of 22.63% in the last 5 years.
  • Company’s PEG ratio is 0.06.
  • The company has an efficient Cash Conversion Cycle of -167.14 days.

Limitations

  • The company has shown a poor revenue growth of 2.85% for the Past 3 years.
  • Company has contingent liabilities of 29,526.56 Cr.

Expert Forecast

Tata Steel Infographics - Expert Forecast
Tata Steel Infographics – Expert Forecast

The stock forecast of Lodha stock for the year 2022

HIGH

RS.2298

MEDIAN

RS.1790

LOW

RS.783

Future stock price targets of Tata Steel stock

Target of Tata Steel stockFuture Stock Price
20221200 to 2400
20253500 to 3700
20306500 to 7000
203511000 to 12000
204015000 to 18000

Please Note

All the views and contents mentioned in this blog are merely for educational purposes and are not recommendations or tips offered to any person(s) with respect to the purchase or sale of the stocks / futures. I do not accept any liability/loss accruing from the use of any content from this blog. All readers of this blog must rely on their own discretion and neither any analyst nor any publisher shall be responsible for the outcome.

Stock Forecast Predictions

Tata Steel Infographics - Predictions
Tata Steel Infographics – Predictions

With the calculations on the basis of CAGR, the long-term investment in Tata Steel stock comes very amazing numbers. Look at the table below (Investment value 113700)

Prediction of Lodha StockFuture Investments
After 1 yearRs.137949
5 yearRs.320913
10 yearRs.921892
15 yearRs.2648851
20 yearRs.7610134
25 yearRs.21863873

Future values are calculated using 23.5% CAGR (Tata Steel)

Conclusion

Tata Steel company was started by Mr. Jamsetji Tata. This company gave value to its investors. If we look at the Compound Annual Growth Rate(CAGR) is 23.5% from the last 10 years, which is very huge in terms of return on investment. The metal sector was in blood bath in the Covid-19 period. But now this industry is recovering and progressing. We highly recommend this stock based on its fundamental ratios. Worth Investment in Stock Market.

Let’s look at the Ratio metrics of Tata Steel

PE RatioSector PEPB RatioSector PBDividend YieldSector Div Yld
17.2423.461.673.012.33%1.63%

Check the Tata Steel Stock on NSE

Frequently Asked Questions

Que: What is the future of Tata Steel?

Ans: The future demand outlook is not very optimistic for the metal industry as a whole due to the disrupted supply chains because of the COVID-19 crisis.

Que: What is the target of Tata Steel share in 2022?

Ans: The stock target of Tata Steel is in the range of 2200 to 2400.

Que: Why is Tata Motors in loss?

Ans: Auto major Tata Motors reported a consolidated net loss of Rs 4,415.5 crore for the quarter ended September (Q2FY22) owing to the dual impact of semiconductor shortage.

Que: What is the target of Tata Steel’s share in 2025?

Ans: The stock target of Tata Steel is in the range of 3500 to 3700.

Que: What is the target of Tata Steel’s share in 2030?

Ans: The stock target of Tata Steel is in the range of 6500 to 7000.

Why Stock forecast by Kamlesh Rode?

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