Tata Steel shares on record-breaking spree; should you avoid buying Tata group stock now?

“India steel remains a bright spot aided by the economic growth cycle”, wrote Tata Steel in the presentation, adding that it is scaling up to capitalise on the growth opportunity in the country’s high growth market. 

Tata Steel highlighted that it is scaling up to capitalise on the growth opportunity in the country. 

Tata Steel aims to take its sustainability journey towards achieving its goal of producing steel with zero carbon emissions by 2045.

Tata Steel mentioned that its India EBITDA margin has averaged 25 per cent over the 10-year period from FY15 to FY24. 

A company's EBITDA margin measures its ability to generate operating profits relative to its revenue, and, hence, serves as an indicator of its operational efficiency.

Tata Steel reported largely better-than-expected financial results for the January-March period on the back of strong volume growth. 

In a separate presentation in May, the steelmaker highlighted that volumes at its India operations more than doubled from 9 million tonnes in F15 to 20 million tonnes in FY24. 

-- Highest annual India crude steel production of around 21 million tonnes 

-- EBITDA per tonne at Rs 7,962

-- Successful amalgamation of 3 listed & 2 unlisted Indian subsidiaries

As of June 13, Tata Steel shares have rewarded investors with a return of 64 per cent, as against gains of 25 per cent and 61 per cent in the Nifty50 and Nifty Metal indices, respectively.

Last week, Zee Business analyst Ashish Chaturvedi suggested buying Tata Steel shares as a fundamental pick for a three-month target of Rs 180. The stock has already crossed this level in a much shorter span of time. 

Several analysts expect even higher levels in the stock from hereon given the series of all-time highs.  

Tata Steel shares have sustained above their 200-day exponential moving average (EMA) for an extended period of time to a series of record highs, reflecting strong bullish sentiments, says SS WealthStreet Founder Sugandha Sachdeva.

The outlook for Tata Steel appears promising from a medium-to-long-term perspective, bolstered by the government's increased focus on infrastructure spending, which accounts for approximately 25-30 per cent of the total steel demand, she mentions.

Tata Steel shares have continued to ascend after staging a dramatic breakout above key resistance at Rs 147 on the weekly chart, and attracted strong buying interest at this now-turned support zone to rebound sharply from lower levels, says Sachdeva. 

This pattern reinforces the uptrend, suggesting the stock is well-positioned to reach levels of around Rs 220-240 in the medium term, she adds. 

"Investors should monitor the Rs 147 support level closely. Buying on dips near this support could be a strategic move to capitalise on the anticipated upward momentum toward the mentioned targets," the analyst adds.