TATASTEEL - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.6
| Stock Code | TATASTEEL | Market Cap | 2,43,716 Cr. | Current Price | 195 ₹ | High / Low | 203 ₹ |
| Stock P/E | 15.6 | Book Value | 107 ₹ | Dividend Yield | 1.84 % | ROCE | 12.7 % |
| ROE | 10.9 % | Face Value | 1.00 ₹ | DMA 50 | 182 ₹ | 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 | 59.8 | MACD | 4.20 | Volume | 1,55,98,247 | Avg Vol 1Wk | 3,69,68,581 |
| Low price | 124 ₹ | High price | 203 ₹ | PEG Ratio | -0.65 | Debt to equity | 0.52 |
| 52w Index | 90.2 % | Qtr Profit Var | 21.8 % | EPS | 11.7 ₹ | Industry PE | 21.6 |
📊 Analysis: TATASTEEL shows moderate fundamentals with ROE at 10.9% and ROCE at 12.7%, indicating average capital efficiency. The P/E of 15.6 is attractive compared to the industry average of 21.6, suggesting undervaluation. Dividend yield of 1.84% provides steady passive returns. EPS of 11.7 ₹ supports earnings strength. However, the PEG ratio of -0.65 highlights weak growth prospects. Debt-to-equity ratio of 0.52 indicates moderate leverage. Technicals show strength with RSI at 59.8 and MACD positive, suggesting bullish momentum. The ideal entry zone lies between 180–190 ₹ for margin of safety. For existing holders, a medium-to-long horizon is viable, with partial profit booking near 200–205 ₹ resistance unless growth metrics improve.
✅ Positive
- Attractive P/E (15.6) compared to industry average (21.6).
- Dividend yield of 1.84% provides steady income.
- Quarterly PAT growth (4,360 Cr. vs 3,693 Cr.) shows earnings momentum.
- FII holdings increased by 0.20%, showing foreign investor confidence.
- DII holdings increased by 0.06%, reflecting domestic support.
- MACD positive (4.20) indicates bullish technical sentiment.
⚠️ Limitation
- ROE (10.9%) and ROCE (12.7%) are modest, limiting compounding potential.
- PEG ratio of -0.65 highlights poor growth prospects.
- Debt-to-equity ratio of 0.52 indicates moderate leverage.
- Stock trading near 52-week high (90.2% of range), limiting upside potential.
📉 Company Negative News
- Negative PEG ratio reflects weak growth outlook.
- High leverage compared to peers may pressure margins in downturns.
📈 Company Positive News
- Quarterly profit variation (+21.8%) shows strong operational improvement.
- Positive technical indicators (RSI and MACD) support near-term momentum.
- Institutional investors marginally increasing stake.
🏭 Industry
- Steel sector benefits from infrastructure growth, construction demand, and global recovery cycles.
- Industry P/E at 21.6 suggests TATASTEEL trades at a discount.
- Structural drivers: government infrastructure push, global steel demand, and industrial expansion.
🔎 Conclusion
TATASTEEL earns a rating of 3.6 due to attractive valuation and steady dividend yield, but faces challenges from modest ROE/ROCE and weak growth prospects. Long-term investors can consider entry in the 180–190 ₹ zone for margin of safety. Current holders may adopt a medium-to-long horizon, with partial profit booking near 200–205 ₹ resistance unless growth metrics improve. The stock remains a cyclical play on infrastructure and industrial demand rather than a strong compounding candidate.