Why experts give ’buy’ tag to Tata Steel shares in bear-hit stock market

Tata Steel shares have been in base building mode since beginning of this month. In year-to-date (YTD) time, Tata Steel share price has shed to the tune of 8 per cent whereas in last one month, it has nosedived around 10 per cent. However, after strong US economic data and rising demand in China due to unlock theme, stock market experts are highly bullish on Tata Steel shares in next one to three months. They said that Tata Steel shares are available at an attractive valuations in current bear-driven stock market and advised positional investors to add this Tata group stock in one's portfolio for ₹130 apiece target in next three months.

On why one should add Tata Steel shares in one's portfolio, Anuj Gupta, Vice President — Research at IIFL Securities said, "Tata Steel Ltd has reported lower than estimated Q3 numbers but due to strong US economic data and rising demand for the metal in China after unlock activities gaining momentum there, Tata Steel is expected to garner good amount of business volume in overseas market. Hence, we are expecting strong upside moves in this Tata group metal stock once there is trend reversal on Dalal Street."

Despite lower than estimated Q3fY23 numbers, ICICI Securities listed out the following positive outcomes for Tata Steel Ltd:

1) Domestic EBITDA/te is likely to improve further in seasonally strong Q4;

2) Commissioning of 6mtpa pellet plant (Q1FY24) and 2.2mtpa CRM complex at KPO-II promises are likely to be margin-accretive;

3) NINL is expected to contribute volumes of 1mnte in FY24;

4) TSE’s EBITDA-level loss is expected to narrow down from Q4FY23;

5) Buy-in transaction for BSPS is likely to be completed by Jun’23, de-risking the business effectively;

6) Efforts afoot to get UK government support in TSUK are likely to have positive outcome; and

7) Enough optionality exists to nearly double the domestic capacity to 40mtpa by FY30 through brownfield expansion, which would likely be accretive to both margins and returns.

Advising positional investors to maintain 'buy on dips' strategy in regard to Tata Steel shares, Anuj Gupta of IIFL Securities said, "Tata Steel shares have strong support at ₹90 apiece levels and hence one should continue buying on every big dip maintaining stop loss at ₹90 apiece levels. The stock may go up to ₹130 apiece levels in next two to three months."

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.