Tata Steel Shares Deliver Flat Returns Over Three Years: Should Investors Hold or Exit? 2024 updates
Tata Steel Shares: Tata Steel, a heavyweight in the steel industry, has seen its shares deliver flat returns over the past three years, leaving long-term investors with mixed feelings. Despite a stellar five-year performance where the stock soared by 312%, the last three years have seen a disappointing decline of 1.56%. This has been a letdown for those who hoped for consistent growth. Even though the stock provided some relief with one-year and two-year returns of 29% and 32%, respectively, it has not been able to sustain the momentum in the short term, dropping 10.48% in the last month and 9.86% over three months.
Bearish Signals and Market Concerns
Tata Steel shares are currently trading in bearish territory. The stock is below key moving averages, including the 5-day, 10-day, 20-day, 30-day, 50-day, 100-day, 150-day, and 200-day averages. This indicates a strong bearish trend, with the stock currently 19% off its all-time high of Rs 184.60, which it reached on June 18, 2024.
Adding to investor concerns, the stock has been highly volatile over the past year, as reflected by its beta of 1.4. Despite this volatility, the stock managed to close 2.29% higher at Rs 149.55 in the last trading session on BSE, bringing the company’s market cap to Rs 1.86 lakh crore.
Expert Opinions: What Should Investors Do?
With the stock in a downward trend, investors are left wondering whether they should hold onto their shares or consider exiting. Here’s what the experts have to say:
- Antique Broking’s Bullish Stance
- Price Target: Rs 180 per share
- Rating: Buy
- Analysis: Antique Broking remains optimistic about Tata Steel, citing the company’s integrated operations, strong brand presence, financial prudence, and expected volume growth. The brokerage has maintained a BUY rating with a sum-of-the-parts (SoTP)-based price target of Rs 180 per share, reflecting an implied 6.7x 1HFY27E EV/EBITDA multiple.
- Phillip Capital’s Neutral Outlook
- Price Target: Rs 174 per share
- Rating: Neutral
- Analysis: Phillip Capital has downgraded Tata Steel to Neutral, with a revised target price of Rs 174. The brokerage expresses concerns over potential challenges in Tata Steel’s Indian operations, including higher levies and retrospective taxation, which could dilute raw material advantages. Moreover, the ongoing transformation of Tata Steel’s Netherlands operations could necessitate additional cash flow from Indian operations, potentially limiting the company’s ability to expand domestically in the near term.
- Axis Securities’ Hold Recommendation
- Price Target: Rs 175 per share
- Rating: Hold
- Analysis: Axis Securities has also taken a cautious stance, downgrading Tata Steel from Buy to Hold with a price target of Rs 175. The brokerage uses SoTP valuation and applies a forward EV/EBITDA multiple of 7.5x for Indian standalone operations, 5.0x for other operations, and 4.0x for European operations to arrive at this target. The revision reflects lower expected EBITDA for FY25-26 due to declining steel prices.
