Mehabe score: 6 G Factor: 7 Piotski Score: 8 The stock has a rating BUY. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 7 and Piotski score of 8.
Description
Tata Steel BSL Ltd is one of the prominent players in the Indian Steel industry. Backed with more than 27 years of experience, It is now India’s 5th largest Secondary Steel Producing Company with an existing steel production capacity of 5.6 million ton per annum. In 2018, Tata Steel acquired Tata Steel BSL Limited (formerly known as Bhushan Steel Limited) through its wholly owned subsidiary Bamnipal Steel Ltd.Site:TATASTLBSLMain Symbol:TATASTLBSL
Stock trades at 89.7, below its 50dma 89.89. However it is trading above its 200dma 73.88. The stock remains weak in the short term due to near term bearish momentum. However overall bullish structure remains intact. Price action will further build up as it moves above its dma50, currently situated at 89.89.
The 52 week high is at 109.70 and the 52week low is at 21.05
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
-Stock is trading at 0.47 times its book value
– is expected to give good quarter
– has delivered good profit growth of 22.18% CAGR over last 5 years
Weakness
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Competition
– The industry trades at a mean P/E of 7.4x. APL Apollo Tubes trades at the industry’s max P/E of 44.96x. TATASTLBSL trades at a P/E of 1.74x
– Industry’s mean G-Factor is 5.6 while the mean Piotski score is 8.0. TATASTLBSL has a G-Factor of 7 and Piotski scoreof 8.
– Average 1 month return for industry is 2.0%. The max 1- month return was given by Jindal Stain.: a return of 8.49 %
Quarterly Results
Sales for period ended Sep 2021 is Rs 8309.0 cr compared to Rs 5519.0 cr for period ended Sep 2020, a rise of 50.6%
Operating Profits reported at Rs 2413.0 cr for period ended Sep 2021 vis-vis 1107.0 for period ended Sep 2020 .
Operating Margins expanded 898.3 bps for period ended Sep 2021 vis-vis Sep 2020 .
The EPS for Sep 2021 was Rs 16.8 compared to Rs 22.66 for previous quarter ended Jun 2021 and Rs 3.13 for Sep 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 29369.0 cr for period ended TTM vis-vis sales of Rs 21419.0 cr for the period ended Mar 2021, a healthy growth of 27.1%. The 3 year sales cagr stood at 12.0%.
Operating margins expanded to 33.0% for period ended TTM vis-vis 25.0% for period ended Mar 2021, expansion of 800.0 bps.
Net Profit reported at Rs 7142.0 cr for period ended TTM vis-vis sales of Rs 2518.0 cr for the period ended Mar 2021, rising 64.7%.
Company recorded a healthy Net Profit CAGR of 61.0% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 8160.0 cr for period ended Mar 2021 vis-vis Rs 1866.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has improved its Return on Equity (RoE) metric. The RoE on Last Year basis was 13.0% compared to 0% over the last 3 Years. – The stock has given a return of 277% on a 1 Year basis vis-vis a return of 49% over the last 3 Years. – The compounded sales growth on a TTM bassis is 60% vis-vis a compounded sales growth of 8% over the last 3 Years. – The compounded profit growth on a TTM basis is 507% vis-vis a compounded profit growth of 55% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 0.74% vis-vis 1.11% for Mar 2021 – Public shareholding has risen for the period ended Jun 2021. The Jun 2021 public holding stood at 22.02% vis-vis 19.79% for Mar 2021
Conclusion
– has reduced debt.
-Stock is trading at 0.47 times its book value
– is expected to give good quarter
– has delivered good profit growth of 22.18% CAGR over last 5 years –
Fundamentally, the stock remains a Strong ‘BUY’ in our long term portoflio.
Technically, the stock has shown near term lack of bullish momentum. The stock remains below its 50 DMA 89.89 and is trading at 89.7.While this may be due to profit taking in near term, we suggest to observe price action. However as investors, this may be a good time to accumalate into a fundamentally solid stock for the next 5 to 10 years
Thus, we retain a BUY for the longer term window, 5-10 years. For the near term, as traders, we suggest to observe price action and buy on bullish breakout.
