1:2 Split, Rs 58.2 Dividend In 3 Yrs: Tata's Steel Stock Is Rs 7.4 Away From 1-Yr Low Ahead Of Q3; BUY Time?

Tata Group-backed steel giant, Tata Steel is going to be in focus on Monday ahead of its Q3 results which are scheduled later in the day. In the third quarter of FY25, brokerages are predicting a decline in revenue and EBITDA in both YoY and QoQ terms. Ahead of Q3FY25, Tata Steel's stock price corrected significantly and is currently less than Rs 7.5 away from its 52-week low.

Tata Steel Share Price:

Last week, on Friday, Tata Steel's share price stood at Rs 130 apiece on BSE, with a market cap of Rs 1,62,284.75 crore, making it the largest steel company in terms of m-cap. Overall, the stock's weekly performance is up by 0.6%. However, year-to-date, the stock is down by nearly 4%.

Tata Steel's share price is Rs 7.4 away from touching its 52-week low of Rs 122.60 apiece. While the stock has declined sharply by 29.6% from its 52-week high of Rs 184.60 apiece.

Tata Steel Q3 Results Preview:

The company has announced that a meeting of the Board of Directors of Tata Steel Limited ('the Company') will be held on Monday, January 27, 2025, inter alia, to consider and take on record the audited Standalone and unaudited Consolidated Financial Results of the Company for the quarter and nine months ended December 31, 2024.

During Q2FY25, the company posted a net profit of Rs 833 crore, compared to a net loss of Rs 6,196 crore in Q2 of the previous fiscal. On the other hand, revenue dipped by 3% YoY to Rs 53,905 crore. EBITDA was at Rs 6,141 crore, while margins were at 11.4%.

According to Axis Securities, Tata Steel's provisional sales volume in India stood at 5.29 MT (up 8.4%/3.5% YoY/QoQ) and in Europe at 2.09 MT (up 7.7%, down 1.9% QoQ).

Thereby, Axis Securities expects consolidated revenue to decline YoY/QoQ led by lower steel price realization in India and Europe, partially offset by its higher steel sales volumes estimate. Further, the brokerage expects EBITDA to decline by ~23% YoY/QoQ each due to lower sales realisation in India and Europe, which offsets benefit from lower coking coal costs and higher sales volumes.

Finally, Axis Securities said, "We model lower EBITDA/t in India at Rs 11,810/t, down 33%/9% YoY/QoQ on account of lower sales price realisation, partially offset by lower coking coal consumption cost. EBITDA/t loss in Europe is likely to narrow down to $53/t vs. $75/t in Q2FY25 and $178/t in Q3FY24 led by better Netherlands EBITDA."

BUY Tata Steel Share Price:

As per Trendlyne data, the consensus recommendation from 30 analysts for Tata Steel Ltd. is BUY. EPS is expected to grow by 233.4% in FY25. The 1-year average target price on Tata Steel was at Rs 159.73 apiece, hinting at nearly 23.12% potential upside ahead.

On the other hand, brokerage Kotak Institutional Equities has recommended selling Tata Steel for a target price of Rs 135.

Tata Steel has given a hefty dividend since its split for the first time in 2022.

Stock Split: The stock split for the first time in July 2022, in the ratio of 1:10, where its face value was adjusted from Rs 10 to Rs 1.

Dividends: The company has delivered three final dividends since its first split. The highest dividend payout was Rs 51 per share in 2022, while Tata Steel delivered Rs 3.60 per share dividend each in 2023 and 2024. Since May 2001, the company has paid up to 30 dividends, as per Trendlyne data. The company has a dividend yield of 2.85% at present.

Tata Steel is a leading global steel manufacturer. It operates in more than 26 countries, with key operations in India, the Netherlands and the UK. The company serves customers in the automotive, construction, engineering, energy and power sectors.