Tata Steel Share Price: Will it touch Rs 150?

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Tata Steel Share Price: What is happening?

Tata Steel share price has made a smart recovery in the last one month, after the company announced a 1:10 stock split. Tata Steel shares had plunged to a 52-week low of Rs 82.70 in June this year,  amid fears that a global recession would hit the demand for commodity stocks. 

However, the stock has jumped over 23% in the last one month, as expectations of an export duty cut and easing rates of coking coal — an essential input in the steel-making process, boosted sentiments. In the year so far, Tata Steel shares are down about 2%. So, the question arises: will Tata Steel share price jump to 52-week high levels?

Quick fact: Tata Steel shares have jumped by more than 13% since the stock-split on July 28th. Here’s a deepdive into Tata Steel share price. 

Let's deep-dive into Tata Steel share price movement

What led to the fall in Tata Steel share price?

Tata Steel shares plunged to a 52-week low in June this year, down more than 45% from their 52-week high levels in the month of Aug-21.  Here are a few reasons behind the fall in share price:

  • A slowing global economy due to the Russia-Ukraine war & the inflation in the US soaring to 41-year high led to an abrupt end to the great commodity bull cycle seen in steel & the other base metals. This led to a heavy fall in metal stocks, including Tata Steel. 
  • Given the huge run-up in steel prices amid the Ukraine crisis, the government had brought in certain duties. In an attempt to improve domestic steel availability and control  steel prices, the government had imposed a 15% export duty on a range of finished steel products in May this year. This led to expectations of lower profits in the steel industry, thus leading to selloff in metal stocks. 
  • Global brokerage firms Citi and JP Morgan had slashed the target price of Tata Steel citing fears of global recession. Analysts noted that asset valuations of the stock are recalibrating given the weak external environment. 

What led to the recovery in Tata Steel share price?

Tata Steel share price has made a smart recovery from its 52-week low. The stock has gained 37% from its low, but is still down about 35% from its highs of Aug-21. Here are a few reasons behind the recent rally:

  • Robust earnings from European subsidiary. Tata Steel beat expectations in the Apr-Jun 22 period, driven by strong business in Europe. Tata Steel Europe reported a record EBITDA, up 294% on-year propelled by a strong tailwind of contractual prices.    
  • Expectations of higher demand due to revival in Auto sector
  • Supply disruptions on account of the Ukraine crisis have boosted realizations on exports for domestic steelmakers leading to boost in sentiments.
  • Expectations of an export duty cut and easing rates of coking coal have also aided the rally in steel stocks in the last 2 months.

Tata Steel Share Price Insight

Out of 988 trading days that Tata Steel stock has seen in the last 4 years, below are the Tata Steel share price movement insights:

  • Tata Steel share price ended in green on 517 trading days
  • Tata Steel share price ended in red on 469 trading days
  • Tata Steel share price was unchanged on 2 trading days

Tata Steel share price target: Should you Buy, Sell or Hold?

  • ICICI Direct: In the backdrop of range bound domestic steel prices, the recent sharp fall in coking coal prices augurs well for Indian steel players, said the research firm. Over the last couple of months coking coal prices have halved from ~$415/tonne in June 2022 to ~$208/tonne currently in August 2022. The benefit of lower coking coal costs will be seen in the upcoming quarter for the company. ICICI Direct has retained a ‘Buy’ rating on the stock with a target price of Rs 130. 
  • Prabhudas Lilladher:  Prabhudas Lilladher has a negative view on the sector due to weak outlook on steel prices and concerns around global demand. Analysts noted that Apr-Jun 22 earnings have come above their estimates, driven by a fall in steel prices with a lag. However, margins way above historical averages in both India and Europe, and a challenging macro environment has led to this negative view. The research house has a ‘Reduce’ rating with a target price of Rs 975 on Tata Steel. 
  • Macquarie: According to Macquarie, Tata Steel's consolidated EBITDA came in above expectations in the Apr-Jun 22 period. European Union (EU) EBITDA per tonne surprised positively, it added. The global brokerage firm expects profitability to fall in the second half of FY23 given a recent correction of steel prices in the EU. It has a 'Buy' call on the stock and expects it to hit Rs 167 (target of Rs 1,670 pre-split). 

Tata Steel share price: More from INDmoney

The stock recommendations in this blog are by the respective research analysts and brokerage firms. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.

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