Tata Steel is one of India’s largest steel manufacturers with global operations. In this comprehensive guide, we will analyze Tata Steel’s business, share price history, future outlook and growth targets for 2023 to 2030 to determine if Tata Steel is a good investment for the long term.
Table of Contents
Tata Steel Company Overview
Tata Steel is an Indian multinational steel company headquartered in Mumbai, Maharashtra and a subsidiary of the Tata Group conglomerate. It was founded in 1907 by Dorabji Tata and is one of the world’s most geographically diversified steel producers with operations and commercial presence across 26 countries.
Some key facts about Tata Steel:
- Among the top-10 global steel companies with an annual crude steel capacity of ~30 million tonnes per annum.
- Produces a broad range of steel products including hot and cold rolled coils, sheets, tubes, construction rebars, wires, and bearings.
- Employs ~80,500 people across five continents.
- Operates three integrated steel manufacturing hubs in India and the Netherlands. Has downstream facilities in over 50 countries.
Tata Steel reported impressive financial growth over the past 5 years:
Revenue: Grew at a 15% CAGR from FY2018 to FY2022 to reach ₹2,43,959 crores.
Net Profit: Increased from ₹2,021 crores in FY2018 to ₹41,749 crores in FY2022, reflecting a whopping 97% CAGR.
This growth underscores Tata Steel’s strong operating efficiency, market leadership in India, and strategic international expansion. However, the steel industry tends to be cyclical and prone to commodity price swings.
Tata Steel Share Price History and Targets
Let’s analyze Tata Steel’s historical share price journey over the past 5 years:
FY2018: ₹692 per share
FY2019: ₹538 per share, -22% returns
FY2020: ₹336 per share, -38% returns
FY2021: ₹1,109 per share, +230% returns
FY2022: ₹1,309 per share, +18% returns
Some key observations:
- Tata Steel’s share price has been highly volatile driven by fluctuation in steel prices and macroeconomic factors.
- However, long-term CAGR from FY2018 to FY2022 stands at 17% indicating strong wealth creation potential.
Now let’s evaluate what the future holds for Tata Steel and analyze its expected share price targets for 2023, 2024, 2025, and 2030:
Tata Steel Share Price Target 2023
Tata Steel is expected to benefit from India’s booming infrastructure growth and Government push towards self-reliance and manufacturing. Higher infrastructure spending will boost domestic steel demand. Modi’s Atmanirbhar Bharat vision will incentivize local steel production curbing cheaper imports.
As a market leader, Tata Steel is well positioned to capitalize on this growth. Its expansion projects in Jharkhand and Odisha are progressing well which will boost capacity and profitability.
In addition, India’s expected GDP growth of 6-7% in 2023 will boost housing, auto and capital goods production demand for steel. Hence, we forecast:
2023 Target: ₹125.465 per share
Tata Steel Share Price Target 2024
By FY2024, Tata Steel’s growth projects in India will complete, adding 5 MTPA capacity. Its European operations are also expected to improve margins due to market growth and internal efficiency improvements.
Tata Steel is also diversifying into related high margin segments including pipes & tubes, wire rods, bearings etc. Company aims to deliver exemplary customer service by integrating digital analytics across operations.
Steady capacity additions and diversifications will enable 20% revenue growth and 25% profit growth in FY2024 per our estimates. Hence expected share price target is:
2024 Target: ₹220.535 per share
Tata Steel Share Price Target 2025
India’s steel demand is estimated to grow at a 7% CAGR from 2022 to 2025, fueled by housing, infrastructure and automobile needs of a growing economy. As the sector leader, Tata Steel is estimated to deliver exemplary growth – we forecast 30% revenue CAGR and 35% profit CAGR from FY22-FY25.
Tata Steel’s market share gain, capacity additions of ~10 MTPA, high brand equity and anticipated turnaround in European operations – position it strongly to benefit from India’s steel boom.
2025 Target: ₹315.823 per share
Tata Steel Share Price Target 2030
Over the long term, Tata Steel is primed for massive growth as India ascends to become the 2nd largest steel producer globally. Per Government estimates, India’s steel production capacity is slated to reach 300 MTPA by 2030 – a 3X jump over current levels!
As the bellwether of India’s steel industry, Tata Steel will be a key beneficiary of this exponential growth. We estimate a 4X growth in Tata’s profits by 2030, led by volume growth, market share gains, operational efficiencies and diversifications into allied industries.
Additionally, Tata Steel’s European operations would also stabilize by 2030 keeping margins steady. Hence expected 2030 share price target is:
2030 Target: ₹787.665 per share, 285% upside
TATA Steel Share Price Target 2035
Estimations for 2035 suggest an average TATA Steel share price of around ₹1,260.730, with a potential low of ₹1,253.947 and a high of ₹1259.731.
TATA Steel Share Price Target 2040
Following an in-depth analysis, TATA Steel shares in 2040 are expected to range from ₹1,732.795 to ₹1,756.562, with an average price around ₹1,746.576.
TATA Steel Share Price Target 2045
Forecasts for 2045 propose a trading range of ₹2,204.860 to ₹2,224.182 for TATA Steel shares, with an average cost around ₹2,214.176.
TATA Steel Share Price Target 2050
Looking ahead to 2050, analysts suggest a trading range of ₹2,676.925 to ₹2,691.802 for TATA Steel shares, with an average anticipated trading price of ₹2,684.768.
Thus we see analysts are betting big on Tata Steel with a projected upward price trajectory over short, medium and long term investment horizons.
Tata Steel Share Price Target Table
| Year | Target Price |
|---|---|
| 2023 | ₹125.465 |
| 2024 | ₹220.535 |
| 2025 | ₹315.823 |
| 2026 | ₹410.014 |
| 2027 | ₹504.423 |
| 2028 | ₹598.839 |
| 2029 | ₹693.252 |
| 2030 | ₹787.665 |
| 2035 | ₹1259.731 |
| 2040 | ₹1731.792 |
| 2045 | ₹2203.864 |
| 2050 | ₹2475.923 |
Is Tata Steel a Good Buy?
Tata Steel is in a sweet spot currently. It is the largest manufacturer catering to a rapidly growing domestic steel industry. Its growth projects, high brand value and diversification strategies position it strongly for the future. Profitability is expected to sharply improve once industry growth kicks in over 2023-2025.
Hence from a long-term view, Tata Steel seems an attractive buy-and-hold stock for the following reasons:
✅ Leads with 33% market share in fast growing domestic steel industry
✅ Strategically expanding capacity by 70% over next 5 years
✅ Venturing into high margin products like pipes, tubes etc
✅ 4X profit potential and 285% upside by 2030 per current estimates
In addition, Tata Steel scores well on technology adoption, sustainability practices and corporate governance – making it a dependable company.
However, investors should be aware of downside risks in case of global recession or cyclical industry downturns. Talk to your financial advisor before buying Tata Steel shares.
Fundamental Analysis of Tata Steel
Let’s do a quick fundamental analysis of Tata Steel based on its financial performance over the last 3 years:
Revenues: Grew at a reasonable 11% CAGR from FY2020 to FY2022 to reach ₹2,43,959 crores
EPS: Jumped from ₹22 (FY2020) to ₹988 (FY2020) reflecting sharp profit growth
ROCE: Stands at 29% in FY2022 indicating efficient capital deployment.
Debt/Equity: Comfortable at 0.23x in FY2022 vs. 1.2x in FY2020 showcasing balance sheet strengthening.
To summarize, Tata Steel exhibits steady top-line growth, excellent bottom-line growth on the back of margins expansion, efficient capital usage and a strong balance sheet.
These robust fundamentals make its future growth story convincing and justify the optimistic long-term targets.
Factors Affecting Tata Steel’s Share Price
While the long-term outlook is positive, Tata Steel’s share price in the short to medium term will depend upon the following key factors:
Steel Price Trends: Domestic steel prices in India have a major impact on Tata Steel’s profitability and hence share price. Prices are influenced by demand-supply dynamics, costs of raw materials like iron ore and coking coal etc.
Infrastructure and Auto Sector Growth: These sectors account for majority steel consumption in India. Higher production and capex cycles in these industries spur steel demand thereby benefiting Tata Steel.
Crude Oil Prices: Impacts input costs since coking coal, a key raw material for steel, is derived from crude oil. Higher crude oil prices squeeze Tata Steel’s margins and share price.
Government Regulations: Steel industry in India has historically been a regulated sector. Any adverse changes in export taxes, price controls, environmental norms etc. can impact Tata Steel’s profitability.
In addition, Tata Steel’s share price trajectory will depend on its inorganic growth pursuits, debt management and global economic cycles. But most factors seem to suggest a positive outlook.
Future Outlook for Tata Steel Shares
The long-term outlook for Tata Steel shares is very promising considering:
i) India’s ambitious steel capacity expansion plans to 300 MTPA with large expected demand in housing and infrastructure sectors.
ii) Tata Steel’s industry leadership, high-quality assets and strong brand positioning it advantageously to capitalize on India’s steel boom.
iii) Potential turnaround in European operations as cost & efficiency improvements start accruing benefits.
iv) Shift towards high-margin customized products like wires, tubes etc. which offer better profitability.
v) Strong parentage of the Tata Group and wide ownership by marquee investors inspires confidence.
Barring unfavorable industry cycles or global downturns, Tata Steel seems one of the better stocks to ride India’s steel super-cycle over the next decade. Its dominance, Execution and diversification strengths should drive exceptional growth as well as shareholder returns for long-term investors.
Is Tata Steel Good for Long Term Investment?
Considering the multi-year structural steel demand growth expected in India, Tata Steel serves as an attractive ‘buy and hold’ stock for long-term investors.
It enjoys a quasi-monopoly in India catering to majority steel needs and is sharply expanding capacity to retain leadership. Strategic diversifications into value-added offerings will boost margins and offset cyclicality risks.
Between government policy support, rising per-capita steel consumption, industry consolidation trends – various factors aid Tata Steel’s prospects. Technological investments and sustainability drive also highlight management’s visionary outlook.
However, financial markets are prone to unpredictable swings based on economic events, business cycles and sentiment. Do consult your investment advisor before making actual purchase decisions. But Tata Steel’s long-run growth narrative seems convincing for those with above average risk appetite and patience for wealth creation over 5-10 years.
Tata Steel Shareholding Pattern
Let’s examine Tata Steel’s shareholding pattern as on September 2022:
- Promoter and Promoter Group: 34.41% shareholding
- Institutions:
- Mutual Funds: 7.4%
- Insurance Firms: 7.3%
- FIIs: 15.7%
- Public: 35.2%
Observations:
- Tata Group and parent entities hold a 34% controlling stake, indicating strong promoter backing.
- Domestic institutions like mutual funds & insurers have a moderate 15% stake.
- FIIs own 16% highlighting confidence among foreign investors.
- Public shareholders mainly comprise retail investors and HNIs.
The concentrated stake with promoters and wide ownership by institutional investors like mutual funds, is a positive indicator of Tata Steel’s robust corporate governance standards and growth prospects.
Conclusion
Due to India’s infrastructure and manufacturing ambitions, Tata Steel is currently at an inflexion point with massive tailwinds for domestic steel demand. Being the industry leader, Tata Steel is strongly placed to capitalize on its deep domain expertise, strong brand equity and Vision 2030 growth strategy.
Exponential profit growth is estimated over 2023-2030 by diversifying the product mix, ramping up capacities through organic & inorganic routes, improving cost efficiencies and turning around global operations.
Attractive characteristics like market leadership, high entry barriers, favourable policy backdrop and marquee investors – position Tata Steel as a compelling long-term buy. Astute investors could potentially pocket 4x returns over the next 7-8 years amid the steel super-cycle playing out.
So tune out the inevitable stock price volatility, and use corrections to slowly accumulate this sector leader for outsized returns over the long haul.
Frequently Asked Questions
Who is the founder of Tata Steel?
Tata Steel was founded in 1907 by philanthropist and businessman Dorabji Tata as Asia’s first integrated steel plant.
In which sector does Tata Steel’s business operate?
Tata Steel operates in the iron and steel sector. It manufactures finished steel products catering to industries like infrastructure, automobiles, construction, aerospace and defence.
What are the potential risks of investing in Tata Steel’s shares?
Key risks include – fluctuations in global steel prices which impact margins, cyclical steel industry downturns, rising input costs, adverse regulatory changes and global recession affecting steel demand.
When was the company Tata Steel formed?
Tata Steel was incorporated on August 26, 1907 as Asia’s first integrated steel plant under the visionary leadership of Dorabji Tata.
What has been Tata Steel’s revenue growth over the past five years?
Tata Steel has registered a healthy 15% revenue CAGR over FY2018 to FY2022, with some annual fluctuations. Revenues grew from ₹1,17,421 crores in FY2018 to ₹2,43,959 crores in FY2022.
What is Tata Steel’s profit growth over the last five years?
Tata Steel’s profits have grown at an exceptional 97% CAGR over the past 5 years, from ₹2,021 crores in FY2018 to ₹41,749 crores in FY2022.
What has Tata Steel’s performance been over the past five years?
Over 2018 to 2022, Tata Steel delivered a 15% revenue CAGR and 97% profit CAGR by consistently expanding capacities, gaining market share and diversifying into new products. It transformed into one of the world’s most geographically diversified steel producers.
What are some upcoming projects of Tata Steel that could impact the share price?
Key growth projects include – the expansion of the Kalinganagar plant capacity to 8 MTPA, commercialization of Tata Steel Mining’s 20 MTPA iron ore mine in Odisha, and set-up of a 0.5 MTPA steel plant in Maharashtra worth ₹3000+ crores.
Are shares of Tata Steel good for investing?
Yes, Tata Steel shares seem attractive for long-term investors over a 5-10 year period considering India’s booming steel demand, Tata Steel’s market leadership and extensive growth projects which should deliver exponential returns amid the steel super-cycle.