Tata Steel, one of India’s largest steel manufacturers, has had a challenging year in 2024. Despite touching a record high of ₹184.60 on June 18, the stock has seen a significant decline, currently trading at ₹139.55. This represents a loss of nearly 20% over six months, leaving investors questioning whether 2025 will bring better prospects.
Performance Overview in 2024
- Year-to-Date (YTD): Flat returns with a marginal loss of 0.11%.
- Six-Month Performance: Down 20%, highlighting significant bearish pressure.
- One-Year Gain: A modest 1.90%, indicating underperformance compared to benchmarks.
- Two-Year Growth: The stock rallied 26%, reflecting better long-term returns.
Technical Indicators
- Relative Strength Index (RSI): Currently at 35.1, signaling that the stock is trading in a neutral zone, neither overbought nor oversold.
- Moving Averages: Tata Steel is trading below its 5-day, 10-day, 20-day, 30-day, 50-day, 100-day, 150-day, and 200-day moving averages, confirming a bearish trend.
- Beta (Volatility): The one-year beta stands at 1.5, indicating high volatility.
Expert Opinions on Tata Steel
Bearish Sentiment
- Mileen Vasudeo (Arihant Capital Markets):
- Recommends a sell call with a target price of ₹124-₹116.
- Cites a lower top, lower bottom formation on daily charts and a negatively poised RSI.
- Suggested stop loss: ₹148.
Moderate to Bullish Sentiment
- Centrum Broking:
- Assigns a price target of ₹168, reflecting cautious optimism.
- JM Financial:
- Issues a BUY call with a target price of ₹175, anticipating near-term recovery.
- JP Morgan:
- Maintains an overweight stance, with a price target of ₹180, citing long-term growth potential.
- Axis Securities:
- Recommends a price target of ₹175, backed by improved profitability and sales growth.
Factors Affecting Tata Steel’s Performance
Challenges in 2024
- Global Steel Prices: Volatility in global steel prices has impacted margins.
- Macroeconomic Concerns: High inflation and interest rates have dampened demand in key sectors like construction and automotive.
- Bearish Technicals: The stock’s inability to break above its moving averages indicates weak momentum.
Opportunities for 2025
- Capacity Expansion:
- Axis Securities predicts a consolidated sales volume increase of 1-1.4 million tons (MT) in FY25.
- Expansion at Kalinganagar Plant (KPO-II) is expected to add 3.5-4 MT annually by FY27.
- Cost efficiencies at KPO-II could lower costs by ₹3,000-₹4,000 per ton, boosting profitability.
- Indian Market Strength:
- Robust domestic demand, driven by infrastructure projects and government spending, may support growth.
- Resilient Margins:
- Improvements in operational efficiency and volume ramp-ups are expected to stabilize margins in FY25.
Analyst Price Targets
| Brokerage | Recommendation | Target Price | Sentiment |
|---|---|---|---|
| Arihant Capital | Sell | ₹124-₹116 | Bearish |
| Centrum Broking | Neutral | ₹168 | Moderately Bullish |
| JM Financial | Buy | ₹175 | Bullish |
| JP Morgan | Overweight | ₹180 | Bullish |
| Axis Securities | Buy | ₹175 | Bullish |
Future Outlook
The recovery potential of Tata Steel in 2025 depends on multiple factors:
- Macroeconomic Stability: A more favorable global economic environment could drive steel demand.
- Execution of Capacity Expansions: Timely ramp-ups at KPO-II and other plants will be key to sustaining long-term growth.
- Commodity Price Trends: Stabilization or an uptick in steel prices could significantly improve margins.
Conclusion
While Tata Steel has faced a tough 2024, strategic expansions and a resilient domestic market offer hope for recovery in 2025. Investors should closely monitor global economic trends, operational updates, and technical signals. For risk-averse investors, waiting for a clearer trend may be prudent, while long-term investors could consider accumulating at current levels, given the attractive valuations.
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