Tata Steel stock has delivered flat returns in 2023; where is it headed?

Shares of Tata Steel Ltd have delivered flat returns for investors in 2023. The Tata Group’s metal stock has lost 0.38% this year. On the other hand, the BSE metal index gained 3.71% during the same period. The 30-stock Sensex, of whom Tata Steel is a key constituent, has risen 8.40% in 2023. However, the Tata Steel stock has climbed 10.67% in a year. The stock has delivered stellar 194% returns in the last three years.

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In the previous session, the metal stock closed at Rs 118.80, down 0.17% on BSE. It touched an intraday low of Rs 118 against the previous close of Rs 119 on BSE. Total 18.01 lakh shares of the firm changed hands amounting to a turnover of Rs 21.37 crore. Market cap of the Tata Group firm stood at Rs 1.45 lakh crore.

In terms of technicals, the relative strength index (RSI) of Tata Steel stands at 56, signaling it's neither trading in the overbought nor in the oversold territory. The stock has a beta of 1.2, indicating high volatility in a year. Tata Steel shares are trading higher than the 20 day, 50 day, 100 day, 200 day but lower than the 5 day and 10 day moving averages.

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The Tata Steel stock hit a 52-week high of Rs 124.30 on January 19, 2023 and a 52 week low of Rs 95 on September 28, 2022.

Abhijeet from Tips2trades said, "Tata Steel is bearish on the daily charts with strong resistance at Rs 123 A close below the daily support of Rs 117 could lead to Rs 111 in the near term."

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Progressive shares in a report said, "The stock has given a breakout from the Symmetrical Triangle Formation. RSI oscillator replicates price activity. The stock is about to start its trend as ADX stands at 19.75. As per symmetrical triangle breakout, the target comes to Rs 172. One can add the stock on declines to Rs 117."

Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher said, "The stock has witnessed a decent rally in the last two months and has resisted near the strong barrier of Rs 124 zone which needs to be breached to continue with the same momentum further ahead. The near-term support lies near Rs 114 level which is where the significant 50EMA lies. The overall trend is strong."

Gaurav Bissa, VP, InCred Equities said, "Metal space has been relatively stable but a slow mover in the last few weeks. Large cap stocks were seen gaining strength but strong momentum was seen in midcap stocks, which witnessed a sharp upside. Tata Steel has been a consistent performer among the metal space. The stock has been forming higher highs and higher lows on the daily charts which is a characteristic of an uptrend. The stock has recently witnessed a breakout from symmetrical triangle pattern breakout on the weekly charts which was followed by some consolidation. The stock is expected to test 130 levels which is the triangle pattern target. Once the RSI moves above 70 on the weekly charts, the stock price can witness a strong thrust towards the higher levels."

Osho Krishan, Sr. Analyst - Technical & Derivative Research, Angel One said, "Tata Steel has been in a stellar uprun in the current financial year and is hovering in the cycle of higher highs – higher lows on the daily chart. The counter recently witnessed a symmetrical triangle breakout, post that underwent correction/profit booking. On the technical front, the support of the neckline is placed around Rs 116-115 zone, while sustenance above the same could augur well for the bulls in the counter to continue its upward march in the near period. On the higher end, a series of resistances could be seen at Rs 120-124-126 and a decisive breach would only dictate the next leg of rally in a short to medium-term time frame."

Tata Steel on July 24 reported a 92% year-on-year decline in its Q1 consolidated net profit (attributable to owners of the company) to Rs 633.95 crore against a profit of Rs 7,764.96 crore in the year-ago period. Consolidated net profit slipped 63% from Rs 1,704.86 crore in Q4FY23.

YES Securities has assigned the target price of Rs 133 per share.

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“In terms of the operational performance, the consolidated production stood at 7.13mt, reporting a fall of 7.9% on a YoY basis and 8.6% on a QoQ basis. The production downfall is on the back of the blast furnace shutdown in Netherlands for relining purposes. The deliveries on the other did not drop as much because of the company’s earlier efforts for stocking up on inventory. The deliveries for the quarter came in at 7.20 mt, a rise of 8.8% on a YoY basis, however showing a fall of 7.5% on a QoQ basis. We revise our rating from BUY to ADD as we believe the stock has shown good returns since the start of the Q2FY24 on the back of stabilising raw material pricing. We maintain our positive outlook on the steel story in India and maintain our target price of Rs 133 per share for Tata Steel,” said the brokerage.

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Centrum Broking has also assigned a target price of Rs 133 per share.

"Tata Steel’s profitability is expected to remain solid amid strong domestic demand and moderation in raw material prices. Besides, in India it has commissioned 6 mtpa pellet plant and 2.2 mtpa CRM facility, while at Netherlands upgraded CRM which will enhance product mix portfolio and earnings as well. Further, NINL is expected to start contributing to overall volumes while major contribution from Kalinganagar Phase 2 expansion is expected to reflect in FY25. We maintain BUY with target price of Rs 133," the brokerage said.