🧠 1. At a Glance
Tata Steel is the OG of Indian steel — founded in 1907, integrated, global, and always “respected.” But FY25 numbers scream slowdown. Margins have compressed, debt is inching back up, and net profits have halved. Still, it offers 2.25% dividend yield, unlike its stingy peer JSW Steel.
But investors now wonder — has this TATA lost its TATA?
🎬 2. Introduction with Hook
Tata Steel is that family uncle who’s got foreign investments, heritage pride, and a solid moustache — but also way too many EMIs and recurring surgeries.
- Net Profit in FY25: ₹3,174 Cr (vs ₹41,749 Cr in FY22)
- ROE? Just 3.6%
- And yet P/E is 60x
If this isn’t prestige inflation, what is?
🏭 3. WTF Do They Even Do? (Business Model)
Tata Steel operates across:
- Mining: Owns iron ore and coal mines
- Manufacturing: Flat & long steel (HRC, CRC, rebar, wire rod, ferro alloys)
- Distribution: Pipes, tubes, construction, auto, appliances
📍Major presence in India, UK, Netherlands
📍Plans to hit 30 MnTPA India capacity by 2025
But Tata Steel’s legacy is also its burden — high-cost European assets drag down otherwise solid Indian operations.
📊 4. Financials Overview – Profit, Margins, ROE, Growth
| Metric | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Sales (₹ Cr) | 1,56,294 | 2,43,959 | 2,43,353 | 2,29,171 | 2,18,543 |
| Net Profit (₹ Cr) | 8,190 | 41,749 | 8,075 | -4,910 | 3,174 |
| OPM (%) | 20% | 26% | 13% | 10% | 12% |
| ROCE (%) | 12% | 31% | 13% | 7% | 9% |
| ROE (%) | 6.26% | 32.88% | 7.17% | -3.55% | 2.74% |
📉 Profit down 92% from FY22
📉 ROE collapsed to 2.74%
📉 Margins still far from recovery
💸 5. Valuation – Is It Cheap, Meh, or Crack?
| Metric | Value |
|---|---|
| P/E | 60.1x |
| P/B | 2.19x |
| Market Cap | ₹2.00 Lakh Cr |
| Book Value | ₹73 |
| Fair Value Range | ₹110–₹140 |
🧮 Based on normalized EPS of ₹5–₹6 and assigning a 18–24x cyclical P/E, the FV lands at ₹110–₹140 range.
Right now, you’re paying for a TATA halo, not steel economics.
🍿 6. What’s Cooking – News, Triggers, Drama
- 🛠️ Q1 FY26 Production hit by planned shutdowns
- 🏗️ Investing in green steel + scrap-based EAFs
- ⚖️ Facing ₹1,902 Cr mineral dispatch penalty — to be challenged
- 💰 Acquired $125.25M more in T Steel Holdings (subsidiary)
- 🇬🇧 European turnaround still a distant dream
🏦 7. Balance Sheet – How Much Debt, How Many Dreams?
| Metric | FY25 |
|---|---|
| Gross Debt | ₹94,801 Cr |
| Net Worth | ₹91,169 Cr |
| D/E Ratio | ~1.04x |
| CWIP | ₹41,622 Cr |
| Fixed Assets | ₹150,914 Cr |
Tata’s steel dreams are powered by CWIP — almost 20% of total assets!
Legacy debt is manageable now, but still not cheap. JSW is worse, but Tata isn’t light either.
💵 8. Cash Flow – Sab Number Game Hai
| Metric | FY24 | FY25 |
|---|---|---|
| CFO | ₹20,301 Cr | ₹23,512 Cr |
| Capex | ₹14,253 Cr | ₹13,985 Cr |
| FCF (approx) | ₹6,000+ Cr |
Despite profit volatility, cash flows are stable due to better working capital and legacy mine ownership.
📐 9. Ratios – Sexy or Stressy?
| Ratio | FY25 |
|---|---|
| ROCE | 9% |
| ROE | 3.62% |
| OPM | 12% |
| Inventory Days | 171 |
| CCC | 67 |
| CFO/EBITDA | ~90% |
Tata Steel’s ratios are better than they look, thanks to internal mining and supply chains. But returns still pathetic at the equity level.
💰 10. P&L Breakdown – Show Me the Money
| Quarter | Revenue (₹ Cr) | PAT (₹ Cr) | OPM (%) |
|---|---|---|---|
| Q1 FY26 | ₹56,218 | ₹1,201 | 12% |
| Q4 FY25 | ₹53,648 | ₹295 | 11% |
| Q3 FY25 | ₹53,905 | ₹759 | 11% |
| Q2 FY25 | ₹54,771 | ₹919 | 12% |
Gradual recovery, but still not even close to FY22 boom.
⚔️ 11. Peer Comparison – Who Else in the Game?
| Company | P/E | OPM % | ROCE | PAT FY25 (₹ Cr) | Dividend Yield |
|---|---|---|---|---|---|
| Tata Steel | 60.1x | 12% | 8.8% | ₹3,174 | 2.25% |
| JSW Steel | 65.6x | 13% | 8.1% | ₹3,491 | 0.27% |
| Jindal Steel | 26.7x | 19% | 10.8% | ₹3,581 | 0.21% |
| SAIL | 21.3x | 10.4% | 6.7% | ₹2,599 | 1.49% |
Tata Steel is overvalued, but gives you a higher dividend and broader global footprint.
🧾 12. Miscellaneous – Shareholding, Promoters
| Holder | Jun 2025 |
|---|---|
| Promoters | 33.19% |
| FIIs | 18.29% |
| DIIs | 24.48% |
| Public | 23.84% |
📉 FII holding has dropped
📈 DII share is steadily rising (LIC ka pyar)
🏛️ 60.25 lakh shareholders and counting
🧑⚖️ 13. EduInvesting Verdict™
Tata Steel is like your grandpa’s Mercedes. Solid heritage. Tough engine. But burns too much fuel, and needs frequent repairs.
✅ Cleaned up India business
✅ Gives dividends
🚫 Global business is a profit vampire
🚫 Low ROE, high P/E
Fair Value Range: ₹110–₹140
(based on 18–24x EPS of ₹5–₹6, with room for 20% growth if FY26 plays nice)
Right now, it’s priced like a luxury sedan… but performing like a 2010 Indica on a Ladakh road trip.
✍️ Written by Prashant | 📅 July 11, 2025
Tags: Tata Steel, Indian Steel Sector, Nifty Metal, Jamshedpur, Dividend Stocks, Commodity Cycles, EduInvesting, Steel vs Debt, TSLP
