Tata Steel has encountered significant challenges in its stock performance recently, primarily influenced by declining metal prices and rising concerns about the economic stability in China. The situation worsened following the imposition of unexpected tariffs by former US President Donald Trump, leading to a sharp downturn in metal stocks. This environment has triggered a substantial selloff in Tata Steel shares, raising alarms among investors.
Tata Steel Faces Stock Challenges
On April 7, Tata Steel’s stock was one of the poorest performers on the index, plummeting by nearly 10%. Investors are increasingly worried that the ongoing trade tensions initiated by Trump could stifle global economic growth, adversely affecting the demand for metals. As a result, Tata Steel’s stock price has fallen almost 50% from its 52-week peak—a notable decline that has raised eyebrows in the market. According to Trendlyne, the share price has dropped by 20.3% over the past year, significantly underperforming its industry peers by 22.06%.
Overview of Q4 FY25 Performance
In a recent update, Tata Steel revealed a 5% reduction in consolidated steel production, totaling 7.45 million tonnes (MT) for the final quarter of FY25. This decrease is largely due to ongoing changes in the company’s operations in the UK. Comparatively, production during the same quarter in the prior fiscal year was 7.85 MT, which included 0.31 MT from the UK division.
- FY25 Production Highlights:
- Total consolidated steel production rose by 3.53% to 30.75 MT, up from 29.7 MT in FY24.
- Domestic production in India saw a year-over-year increase of 5%, reaching about 21.8 million tonnes.
Sales and Market Demand
Tata Steel also reported a 5.34% increase in consolidated sales for Q4 FY25, amounting to 8.28 MT compared to 7.86 MT in the same period last year. For the entire fiscal year, sales climbed by 6%, totaling 30.86 MT versus 29.16 MT in FY24.
- Key Figures:
- Domestic deliveries surged to approximately 21 million tonnes, an increase from 19.91 million tonnes the previous year.
- Q4 domestic deliveries rose to 5.6 million tonnes, slightly up from 5.42 million tonnes in Q4 FY24.
Investment Insights: Buy, Sell, or Hold?
Tata Steel shares opened at ₹134.45 on the BSE today, experiencing fluctuations with an intraday low of ₹128.40 and a high of ₹136.25. According to Rajesh Bhosale, an Equity Technical and Derivative Analyst at Angel One, the recent tariff situation has led to a notable selloff in the metal sector, with Tata Steel experiencing a significant correction.
- Bhosale’s Perspective:
- Short-term traders might consider exiting due to negative momentum.
- Long-term investors should look for support in the ₹115 – ₹120 range to accumulate shares gradually.
Riyank Arora, a Technical Analyst at Mehta Equities Ltd, echoed similar sentiments, noting that Tata Steel has dropped 30.25% from its 52-week high and is currently trading around ₹129. He highlighted major support at ₹120 and resistance at ₹140, suggesting a sideways trend in the near term.
- Arora’s Recommendations:
- Hold existing positions and buy gradually during dips, but enforce a strict stop loss below ₹120.
Conclusion
As Tata Steel navigates through these turbulent times, investors should remain cautious while considering their options in the current market landscape. With significant fluctuations and market pressures, a strategic approach is essential for navigating potential future opportunities. For more insights on long-term investments, check out our recommendations for top stock picks for FY26.
