TATASTEEL - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 3.8

📊 Core Financials Overview

Profitability

ROE: 10.9% and ROCE: 12.7% are moderate, reflecting decent capital efficiency for a cyclical industry.

EPS of ₹11.3 and PAT of ₹3,693 Cr show stable earnings, with a QoQ profit growth of 5.28%.

Operating margins are under pressure due to global steel price volatility and input costs.

Balance Sheet Health

Debt-to-equity ratio: 0.50 — manageable for a capital-intensive business, though leverage remains a watchpoint.

Book Value of ₹102 vs Current Price ₹172 → P/B ratio ~1.69, indicating fair valuation.

Dividend Yield of 2.09% adds solid income appeal for long-term holders.

Cash Flow & Stability

PEG ratio of −0.61 is distorted due to inconsistent earnings growth, typical in cyclical sectors.

RSI at 67.4 and MACD positive suggest bullish momentum, though nearing overbought territory.

📉 Valuation Metrics

Metric Value Insight

P/E Ratio 14.5 Undervalued vs industry PE of 23.1

P/B Ratio ~1.69 Fairly priced

PEG Ratio −0.61 Not meaningful due to cyclical earnings

Intrinsic Value ~₹231.5 Estimated ~34% above current price

1

Tata Steel appears undervalued by ~27–34%, based on intrinsic valuation models

1

.

🏭 Business Model & Competitive Edge

Sector: Tata Steel Ltd is a global steel manufacturer with operations spanning mining, production, and distribution.

Strengths

Integrated value chain from raw materials to finished products

Strong domestic and international footprint (India, Europe, Southeast Asia)

Diversified product mix including branded steel, automotive-grade steel, and long products

Challenges

Exposure to commodity cycles and global demand fluctuations

FII holding declined (−1.07%), though DII interest rose (+1.59%)

Revenue has declined from ₹2.43 lakh Cr to ₹2.29 lakh Cr over FY22–FY24

2

Despite cyclical headwinds, Tata Steel’s scale, integration, and brand strength offer resilience and long-term potential.

📌 Entry Zone Recommendation

Suggested Entry Range: ₹155–₹165

Below 50 DMA (₹162) and closer to 200 DMA (₹154)

RSI suggests waiting for a mild pullback before entry

🧭 Long-Term Holding Guidance

Hold if Already Invested: Strong fundamentals and undervaluation support long-term compounding.

Accumulate on Dips: Especially near ₹160 for better margin of safety.

Watchlist Triggers

EPS growth and margin recovery

Global steel demand and pricing trends

Institutional accumulation and capex execution

Tata Steel is a legacy industrial powerhouse with global reach and strategic integration. For deeper insights, explore the TopStockResearch analysis or AlphaSpread’s valuation dashboard.

1

www.alphaspread.com

2

aliceblueonline.com

Edit in a page