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Should You Buy Tata Stock If It Doubles Profit In Two Years And Is Available At A 33% Discount?


Tata Steel Shares: On the NSE, the share price of Tata Steel is down more than 33% from its 52-week high and edging closer to its 52-week low of Rs. 991.80 a share. The share price of Tata Steel today started with a gap to the negative of about Rs 15 per share and went on to touch an intraday low of Rs 1010.65 on NSE, which is about Rs 20 over its 52-week low. However, due to persistently high steel prices, the steel stock enjoyed a successful financial year in 2020–2021 and 2021–2022 during which it doubled its earnings.

Experts have ascribed the excise levy imposed as the cause of the approximately 25% correction in metal prices over the past three months. They claimed that when the Indian government placed an excise levy on steel exports, they would no longer receive as much business from abroad as they had in recent years. In addition, the monsoon season, during which the demand for metal goods is anticipated to decline even further, is rapidly coming. Therefore, it is anticipated that Tata Steel will post lower Q1FY23 earnings than Q4FY22 figures. In the upcoming 2-3 months, they anticipated further stock price deterioration.

"Tata Steel Ltd. is facing a double whammy of dropping realizations and rising raw material prices, and as if that's not bad enough, the government of India put a 15 percent export levy on finished steel products," said Punit Patni, Equity Research Analyst, Swastika Investment Ltd. The steel industry has experienced a significant sell-off as a result, and Tata Steel Ltd. has seen a 35 percent correction from its 52-week high price.


Should You Buy the Dip?

"As we can see, the stock is under significant pressure after the government decreased the tariffs on the import duty of steel," said Ravi Singhal, vice chairman of GCL Securities. We believe it can yet decrease further, perhaps to 800 levels. The unlocking of China's economy and China's stimulus program, according to Singhal, will enable the commodity price to sustain above. Therefore, our advice is to aim to amass between 900 and 800. He said, "Stop loss at 700, goal 1270 to 1370."

Furthermore, according to experts, the medium- to long-term picture is still favorable because domestic demand is still strong as a result of increased housing demand, private Capex activity, and government expenditure on infrastructure. The developed nations are focusing on climate change and plan to reduce the production of coal-based steel and increase the production of green steel, which is hydrogen and carbon-based steel. In addition, China has decided to reduce steel production in the next decade to comply with the carbon emission norms. A big opportunity will arise for Indian steel manufacturers to fill the supply gap as a result of China reducing its steel production and developed nations focusing more on green steel in the future years. Indian businesses enjoy a competitive edge due to the easy access to cheap iron ore and labor.


Investors can build up their holdings of this company over the medium to long term, but the near-term outlook is contingent upon how long the export duty remains in place, according to Patni.


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