TATASTEEL - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.9
| Stock Code | TATASTEEL | Market Cap | 2,31,456 Cr. | Current Price | 185 ₹ | High / Low | 203 ₹ |
| Stock P/E | 14.8 | Book Value | 107 ₹ | Dividend Yield | 1.94 % | ROCE | 12.7 % |
| ROE | 10.9 % | Face Value | 1.00 ₹ | DMA 50 | 180 ₹ | DMA 200 | 168 ₹ |
| Chg in FII Hold | 0.20 % | Chg in DII Hold | 0.06 % | PAT Qtr | 4,360 Cr. | PAT Prev Qtr | 3,693 Cr. |
| RSI | 50.7 | MACD | 4.46 | Volume | 2,84,38,704 | Avg Vol 1Wk | 4,58,12,741 |
| Low price | 124 ₹ | High price | 203 ₹ | PEG Ratio | -0.62 | Debt to equity | 0.52 |
| 52w Index | 77.6 % | Qtr Profit Var | 21.8 % | EPS | 11.7 ₹ | Industry PE | 20.7 |
💰 Financials: Tata Steel (TATASTEEL) shows stable fundamentals with ROE at 10.9% and ROCE at 12.7%, reflecting moderate efficiency in capital usage. Debt-to-equity ratio of 0.52 indicates a leveraged balance sheet but within manageable levels. Quarterly PAT improved to ₹4,360 Cr. from ₹3,693 Cr., showing healthy earnings growth (+21.8%). Cash flows remain supported by strong demand in steel and allied products, though cyclicality in commodity prices impacts margins.
📊 Valuation: Current P/E of 14.8 is below the industry average of 20.7, suggesting undervaluation relative to peers. P/B ratio (~1.7) is reasonable compared to book value of ₹107. PEG ratio of -0.62 signals negative growth prospects, reflecting cyclical risks. Intrinsic value analysis suggests the stock is fairly valued with potential upside if steel demand remains strong.
🏭 Business Model & Competitive Advantage: Tata Steel is one of the largest steel producers globally, with integrated operations across mining, steelmaking, and downstream products. Its competitive advantage lies in scale, brand strength, and diversified geographic presence. However, profitability is sensitive to global steel cycles, raw material costs, and regulatory pressures.
📈 Entry Zone: Considering DMA 50 (₹180) and DMA 200 (₹168), accumulation is attractive in the ₹170–₹185 range. Long-term investors can hold for exposure to infrastructure growth and global steel demand, though cyclical risks must be factored in.
Positive
- ROE (10.9%) and ROCE (12.7%) reflect moderate efficiency.
- Quarterly PAT growth (+21.8%) indicates earnings momentum.
- P/E of 14.8 is below industry average, suggesting undervaluation.
- Strong brand and global presence in steel production.
Limitation
- Debt-to-equity ratio of 0.52 indicates moderate leverage.
- PEG ratio of -0.62 signals weak growth prospects.
- Profitability sensitive to commodity cycles and raw material costs.
- High cyclicality in steel demand impacts earnings stability.
Company Negative News
- Steel industry faces margin pressure from raw material price volatility.
- Global demand slowdown risks impacting profitability.
Company Positive News
- Increase in FII holdings (+0.20%) and DII holdings (+0.06%).
- Strong quarterly profit growth supports investor sentiment.
Industry
- Steel industry P/E at 20.7 indicates Tata Steel trades at a discount.
- Sector growth driven by infrastructure, construction, and manufacturing demand.
- Global commodity cycles remain a key risk factor.
Conclusion
🔑 Tata Steel is a fundamentally stable company with strong global presence and undervaluation relative to peers. While debt levels and cyclicality pose risks, its earnings momentum and infrastructure-driven demand make it attractive. Entry around ₹170–₹185 offers a favorable risk-reward balance. Long-term holding is justified for investors seeking exposure to the steel and infrastructure growth story.