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
 | Basic Materials |
 | Steel |
 | Bombay House, Mumbai, India |
 | India |
 | 91 22 6665 8282 |
 | https://www.tatasteel.com |
Tata Steel Chart
Tata Steel Index presence
| NIFTYALPHA | NIFTY100WEIGHT | NIFTYEQWGT | NIFTY100 | NIFTY50 |
| NIFTYLGEMID250 | NIFTY200 | NV20 | NIFTYCDTY | LIQ15 |
| NIFTYDIVOPPT | NIFTY500VAL50 | NIFTYTATA | NIFTYTATA25 | NIFTYHIGHBETA |
| NIFTY100ALP30 | SENSEX | BSE500 | METAL | SNSX50 |
| BSE100 | BSE200 | LMI250 | ALLCAP | LRGCAP |
| BSE100LARGECAPTMC | BASMTR | GREENEX | CARBONEX | SPBSMOIP |
| SPBSQIP | MFG | SPBSEVIP | ESG100 | S&P LARGEMIDCAP |
Tata Steel Infographics
Tata Steel 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 Ratio | Sector PE | PB Ratio | Sector PB | Dividend Yield | Sector Div Yld |
| 17.24 | 23.46 | 1.67 | 3.01 | 2.33% | 1.63% |
Read more about PE ratio with infographics | Read more about dividend and dividend yield with infographics
Financials of Tata Steel
Income Table
| Financial Year | FY 2018 | FY 2019 | FY 2020 | FY 2021 |
| Total Revenue | 1,38,399.02 | 1,59,494.40 | 1,51,184.66 | 1,57,690.66 |
| EBITDA | 32,331.60 | 30,842.53 | 14,907.95 | 30,684.04 |
| PBIT | 26,589.90 | 23,500.70 | 6,200.28 | 21,450.40 |
| PBT | 21,135.16 | 15,840.60 | -1,380.44 | 13,843.69 |
| Net Income | 13,434.33 | 10,218.33 | 1,556.54 | 7,490.22 |
| EPS | 120.93 | 84.92 | 12.94 | 62.21 |
| DPS | 10 | 13 | 10 | 25 |
| Payout ratio | 0.08 | 0.15 | 0.77 | 0.4 |
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 Year | FY 2018 | FY 2019 | FY 2020 | FY 2021 |
| Current Assets | 67,877.16 | 58,990.98 | 58,732.72 | 60,211.90 |
| Non Current Assets | 1,40,844.98 | 1,73,782.46 | 1,90,416.40 | 1,83,697.29 |
| Total Assets | 2,08,722.14 | 2,32,773.44 | 2,49,149.12 | 2,43,909.19 |
| Current Liabilities | 55,661.41 | 61,034.13 | 61,660.91 | 70,867.13 |
| Non Current Liabilities | 91,233.62 | 1,00,436.46 | 1,11,325.31 | 95,533.61 |
| Total Liabilities | 1,46,895.03 | 1,61,470.59 | 1,72,986.22 | 1,66,400.74 |
| Total Equity | 61,827.11 | 71,302.85 | 76,162.90 | 77,508.45 |
| Total Liabilities & Shareholder’s Equity | 2,08,722.14 | 2,32,773.44 | 2,49,149.12 | 2,43,909.19 |
| Total Common Shares Outstanding | 120.33 | 120.33 | 120.33 | 120.45 |
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 Year | FY 2018 | FY 2019 | FY 2020 | FY 2021 |
| Net Change in Cash | 2,933.02 | -4,513.20 | 4,462.04 | -2,200.26 |
| Changes in Working Capital | -12,163.75 | -2,503.71 | 2,090.29 | 15,786.99 |
| Capital Expenditures | 7,478.50 | 9,091.00 | 10,398.00 | 6,978.59 |
| Free Cash Flow | 544.89 | 16,244.95 | 9,770.72 | 37,348.09 |
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
| Stock | PE Ratio | PB Ratio | Dividend Yield |
| Tata Steel Ltd | 17.24 | 1.67 | 2.33% |
| JSW Steel Ltd | 19.56 | 3.35 | 1.27% |
| Steel Authority of India Ltd | 10.6 | 0.97 | 2.63% |
| Jindal Steel And Power Ltd | 9.26 | 1.2 | — |
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
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
| Investors | Dec-18 | Mar-19 | Jun-19 | Sep-19 | Dec-19 | Mar-20 | Jun-20 | Sep-20 | Dec-20 | Mar-21 | Jun-21 | Sep-21 |
| Promoters | 33.12 | 33.12 | 33.12 | 33.12 | 33.12 | 34.41 | 34.41 | 34.41 | 34.41 | 34.41 | 34.41 | 34.41 |
| FIIs | 15.05 | 14.6 | 13.79 | 13.65 | 15.34 | 12.39 | 11.84 | 11.45 | 16.87 | 18.56 | 21.94 | 22.38 |
| DIIs | 29.03 | 29.06 | 30.26 | 30.13 | 29.27 | 29.66 | 29.79 | 29.87 | 25.84 | 25.16 | 19.28 | 18.28 |
| Government | 0.11 | 0.11 | 0.11 | 0.11 | 0.2 | 0.22 | 0.22 | 0.25 | 0.25 | 0.25 | 0.1 | 0.1 |
| Public | 22.69 | 23.11 | 22.72 | 22.99 | 22.08 | 23.32 | 23.73 | 24.02 | 22.62 | 21.62 | 24.27 | 24.83 |
Tata Steel 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
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 stock | Future Stock Price |
| 2022 | 1200 to 2400 |
| 2025 | 3500 to 3700 |
| 2030 | 6500 to 7000 |
| 2035 | 11000 to 12000 |
| 2040 | 15000 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
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 Stock | Future Investments |
| After 1 year | Rs.137949 |
| 5 year | Rs.320913 |
| 10 year | Rs.921892 |
| 15 year | Rs.2648851 |
| 20 year | Rs.7610134 |
| 25 year | Rs.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 Ratio | Sector PE | PB Ratio | Sector PB | Dividend Yield | Sector Div Yld |
| 17.24 | 23.46 | 1.67 | 3.01 | 2.33% | 1.63% |
Check the Tata Steel Stock on NSE
Frequently Asked Questions
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.
Ans: The stock target of Tata Steel is in the range of 2200 to 2400.
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.
Ans: The stock target of Tata Steel is in the range of 3500 to 3700.
Ans: The stock target of Tata Steel is in the range of 6500 to 7000.
