Shares of Tata Steel: Tata SteelAfter maintaining a buy call on Citi’s stock, the stock price was noticed. The stock has fallen over 32 per cent in the last three months amid concerns over inflation, hike in interest rates and export duty. However, brokerages appear to be divided on the future trajectory of the stock, which has delivered strong returns to investors over the past two years.
It comes at a time when steel sector China, the largest consumer of metals and steel, is under heavy pressure due to rising inflation concerns and sluggish demand following the re-emergence of Covid-19 in China. Exacerbating the crisis of domestic metal products, the government of India To bring down the prices, 15 per cent export duty has been imposed on steel. Media reports suggest that the government is not ready to withdraw or reduce export duty as demanded by steel companies. There is a duty of 50 per cent on all grades of iron ore, 45 per cent on pellets and 15 per cent on non-alloy steel except the part of semi-finished steel.
According to the Indian Steel Association (ISA), the duty on steel will give a negative signal to investors and will impact capacity utilisation. India may lose export opportunities and the decision may impact overall economic activity, it said.
stock price history
The stock, which hit a high of Rs 1,386.25 on April 6, is currently trading at Rs 867.05, turning into a decline of 59.88 per cent during the period. The large cap stock touched a high of Rs 882, up 2.42 per cent on the BSE. Shares of Tata Steel are trading below the 5 day, 20 day, 50 day, 100 day and 200 day moving averages.
A total of 2.92 lakh shares of the firm changed hands with a turnover of Rs 19.97 crore on BSE. The firm’s market cap on the BSE was Rs 1.05 lakh crore. The stock hit a 52-week high of Rs 1,534.60 on August 16, 2022 and a 52-week low of Rs 843 on June 20, 2022.
What is a brokerage
Global brokerage City remains bullish on Tata Steel and has maintained an over the counter buy rating. However, it has reduced its target price from Rs 1,800 to Rs 1,085, indicating a growth of 25 per cent in the counter from the previous close.
There has been a sharp decline in the shares of Tata Steel recently. The stock has fallen nearly 45 percent from its 52-week high and is hovering near its 52-week low.
Tata Steel is trading at a P/B value of 0.8x, which is not less than its mean of 0.7x. However, given the stimulus expectations from China, the stock may not reach the level of 0.5x of 2020.
Elsewhere, Motilal Oswal Financial Services believes that the Tata Group firm’s standalone EBITDA may contract up to 66 per cent for the first half of the current fiscal due to lower ASPs, lower demand, coking coal prices and Driven by high base effect.
It added that the cost structure would only benefit from reduction in coking coal prices, that too for the requirement of 70-75 per cent as India’s operations are capped at coking coal for the remainder.
“It has cut its consolidated EBITDA estimate for FY13 by 22 per cent, lower than expected sales, due to lower ASP and higher coking coal cost,” the brokerage firm said.
Motilal Oswal Financial Services has maintained a neutral rating on Tata Steel but has reduced its target price to Rs 965 from Rs 1,410 earlier.
Manoj Dalmiya, Founder & Director, Profitable Equities, said: “Tata Steel is currently forming an inside bar after a trendy move which is now going sideways. It could be volatile at the current price level. If it breaks the current level then it may go down towards the level of Rs 768. Some buying can be done at current levels and further towards Rs 768. Recommend to deposit on the downside from a long term perspective.
Ravi Singh, Vice President and Research Head, Share India said, “Steel prices are not getting support due to slowdown in China. Unless the Chinese government announces massive stimulus to revive the economy, the economic activity will likely remain curtailed. Also, to limit volatility in steel prices, China re-introduced a number of rules to control trade. These sets of rules resulted in a significant drop in metal prices. Tata Steel stock may remain weak for few more days and price buying will come towards Rs 950 level.
The views and investment suggestions of experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decision.
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