Tata Group-backed metal giant, Tata Steel Ltd share price gave no returns in August 2024, as it was broadly bearish and fell by over 3% on BSE and NSE. On September 1, the company announced that its scheme of arrangement involving The Indian Steel & Wire Products has become operative effective from Sunday onward. Accordingly, Tata Steel stock will be in focus during the trading week from September 2-6. Is it time to buy?
Tata Steel Share Price:
Tata Steel's stock price ended at Rs 152.80 apiece, with a market cap of Rs 1,90,747.00 crore on August 30, 2024, which was the last trading day of that month. Overall, in August 2024, the stock fell by 3.4% on BSE.
The stock's 52-week high and low are at Rs 184.60 apiece and Rs 114.25 apiece respectively. YTD, the stock has climbed by 9.2%.
Tata Steel Big Update:
On September 1, Tata Steel said the Scheme of Amalgamation has become operative effective today i.e., September 1, 2024. In terms of the Scheme of Amalgamation, The Indian Steel & Wire Products Ltd ('ISWP') stands amalgamated into and with the Company and dissolved without being wound up on and from the Effective Date.
Also, Tata Steel informed that as part of the Scheme of Amalgamation, the Memorandum of Association of the Company stands amended to the extent given below:
- The applicable main objects in the Memorandum of Association of ISWP shall be added to the matters which are necessary for the furtherance of the objects of the Memorandum of Association of the Company, to the extent such objects are not already covered in the existing Memorandum of Association of the Company.
- The authorized equity share capital of ₹36 crore of ISWP stands merged with the authorized share capital of the Company in the class of Ordinary Equity Shares of face value ₹1/- each. Consequently, the authorized share capital of the Company will be ₹32,619.50 crore.
In 2022, Tata Group commenced the process of merging six subsidiaries into Tata Steel.
These included three listed companies such as Tata Metaliks, Tata Steel Long Products and The Tinplate Company of India. Moreover, The Indian Steel & Wire Products is part of the other three unlisted companies including Tata Steel Mining and S&T Mining Company.
Tata Steel BUY/SELL?
Post Q1 results, Axis Securities in its report said, "Tata Steel's reported a mixed set of numbers with consolidated revenue down 8%/7% YoY/QoQ on lower shipments and NSR, while EBITDA (up 29%/1% YoY/QoQ) stood up by 29%/1% YoY/QoQ, 5% ahead of consensus on better EBITDA from ex-Europe operations."
Further, the brokerage highlighted that Tata Steel has guided that the NSR in India will be Rs 1,500/t lower QoQ, in the UK it will be flat and in the Netherlands, it will be down by £60/t QoQ. Coking coal consumption cost will be lower by $15/t and $26/t QoQ in India and the Netherlands respectively, while at UK coal consumption cost will not be relevant as it closes its BFs. Iron ore, in UK and Netherlands will be $7/t and $17/t lower QoQ in Q2FY25.
Accordingly, Axis Securities added, "Rising Debt amidst weak steel prices, expansion and restructuring capex at India and UK poses a challenge. We downgrade to HOLD from BUY post Q1FY25 results."
Meanwhile, Julius Bar in its report said, "TSL remains a strong player in India's steel industry, given its large scale, low-cost domestic operations, and focus on value-added steel (ca 70% of total deliveries). Recent SC judgement is expected to lead to marginal cost and one-time impact for arrear dues. Maintain Reduce with TP of INR 160 (6x EV/EBITDA FY 2026E)."
However, the highest target price is set by JM Financial to the tune of Rs 190 on Tata Steel for 12 months. The brokerage has recommended BUY as well.
Tata Steel Corporate Actions:
Earlier, Tata Steel turned ex-dividend on June 21, which was also the record date for the final dividend of Rs 3.60 per share for FY24, the same as the payout in FY23. The dividend payment date was fixed on and from July 19, 2024.
However, its highest dividend payout was Rs 51 per share in 2022, and cumulatively it paid Rs 63.75 per share in that year.
Additionally, Tata Steel has issued 1 free bonus share on the existing 1 equity share, taking the ratio to 1:1. Also, Tata Steel stock has also turned ex-split in 2022 in the ratio of 1:10.
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