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X

Tata Steel Ltd.

Large Cap

Evaluated by 8173 users |

BSE

: 500470 |

NSE

: TATASTEEL |

Steel/Sponge Iron/Pig Iron

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The valuation guidance of this company is based on Consolidated basis.
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Analysis of Financial Track Record

Data adjusted to bonus, split, extra-ordinary income, rights issue and change in financial year end
10 Year X-Ray
MoneyWorks4me Colour Coding
Value Creation To be investment worthy, a company has to create a shareholder value in excess of its cost of capital employed. VCI (Value Creation Index) shows how efficient has the company been in doing this.
Value Creation Index: Colour Rating Guide
  • >0.25 : Very Good
  • 0 to 0.25 : Somewhat Good
  • <0: Not Good
 Mar'05Mar'06Mar'07Mar'08Mar'09Mar'10Mar'11Mar'12Mar'13Mar'14
Return on Capital Employed
The return on capital employed gives a sense of how well a company is using its money to generate returns.
34.31%28.07%16.45%16.5%11.43%-0.41%12.47%5.6%-4.75%5.58%
Value Creation Index
The difference between ROCE and WACC as a Proportion of WACC reveals the extent of value created by a company.
Ie. (ROCE-WACC)/WACC
ROCE is Return on Capital Employed
WACC is Weighted Average Cost of Capital
1.880.910.260.19-0.04-1.030.00-0.54NANA
Growth Parameters Growth Parameters help gauge a company's growth in the past 10 years. A value creating company needs to grow at a sustainable pace to continue creating value.
For Net Sales and EPS Growth Rate
  • >12% : Very Good
  • 8% to 12% : Somewhat Good
  • <8% : Not Good
For Debt To CFO
  • 0 to <1.5 : Very Good
  • 1.5 to <3 : Somewhat Good
  • >3 or <0: Not Good
Net Sales (Rs. Cr.)
Net Sales is calculated by deducting excise duty, sales tax and other such deductible indirect taxes from the gross sales of a company.
15,99920,32225,2121,31,5341,47,3291,02,3931,18,7531,32,9001,34,7121,48,614
Y-o-Y Gr. Rt.-27%24.1%421.7%12%-30.5%16%11.9%1.4%10.3%
Adjusted EPS (Rs.)
Adjusted Earning per Share is the company’s net profit per share after adjusting for extra-ordinary/exceptional items
57.9259.364.02104.52104.01-31.4786.0528.46-80.8235.77
Y-o-Y Gr. Rt.-2.4%8%63.3%-0.5%-130.3%NA-66.9%-384%NA
Book Value per Share (Rs.)
The total value that a company will fetch upon liquidation (if it is closed down), after settling all obligations is called its Book Value. Book value of a company includes only tangible assets. Book value allocated to each outstanding share is called Book Value per share
113.93160.29217.45391.08303.27257.33369.16428.52344.65411.84
Adjusted Net Profit Adjusted Net Profit is a measure of company's profitability after accounting for all costs and adjusting for one time events. 3,6183,7094,2007,6297,592-2,7908,2482,764-7,8503,474
Net Op. Cash Flow (Rs. Cr.)
This refers to the amount of cash a company generates from the revenues less operating expenses.
3,1753,7365,50313,39415,69610,5025,51211,38514,03513,146
Debt to Cash Flow from Ops
Debt to CFO (Cash Flow from Operations) conveys the number of years it will take for a company to repay its debt, given the cash generated from operations.
CFO: It is the amount of cash generated by the company through its core business operations without looking at the impact of its capital structure. It indicates whether the company is able to generate sufficient cash from its operations to maintain and run its operations.
1.531.284.734.083.885.1711.015.264.886.21
CAGR
The Growth rate helps you understand how the company has performed over different time frames.
CAGR Colour Code Guide
CAGR Colour Code Guide
  • >12% : Very Good
  • 8% to 12% : Somewhat Good
  • <8% : Not Good
  9 yrs 5 yrs 3 yrs 1 yr
Net Sales
Net Sales is calculated by deducting excise duty, sales tax and other such deductible indirect taxes from the gross sales of a company.
28.1%0.2%7.8%10.3%
Adjusted EPS
Adjusted Earning per Share is the Company’s net profit per share after adjusting for extra-ordinary/exceptional items.
-5.2%-19.2%-25.4%NA
Book Value per Share
The total value that a company will fetch upon liquidation (if it is closed down), after settling all obligations is called its Book Value. Book value of a company includes only tangible assets. Book value allocated to each outstanding share is called Book Value per share
15.46.33.719.5
Key Financial Parameter The key financial ratios show the growth and sustainability of the Value Creation Index.
Performance Ratios: Colour Rating Guide
  • >12% : Very Good
  • 8% to 12% : Somewhat Good
  • <8% : Not Good
Debt to Equity Colour Rating Guide
  • 0 to 1 : Very Good
  • >1 to 2 : Somewhat Good
  • >2 or <0: Not Good
Return on Equity (%)
Return on Equity shows the amount of net profit generated as a percentage of shareholders equity. 
ROE measures a company's profitability over the money shareholders have invested. 
60.3342.133.7131.2524.52-11.0427.546.71-19.118.69
Operating Profit Margin (%)
Operating Profit Margin shows how much profit a company makes (before interest payment and taxes) on sales. It is advisable to look at the change in a company’s operating margin over time and compare the company's yearly or quarterly numbers to those of its competitors.
38.2530.9429.313.5212.297.8414.19.349.1511.04
Net Profit Margin (%)
NPM (Net Profit Margin) is the ratio of profit, net of taxes and interests to sales. It is advisable to look at changes in a company’s NPM over time and to compare them with the competitor’s NPM.
22.4118.1916.615.785.08-2.836.841.75-6.052.38
Debt to Equity
This ratio indicates the ratio of equity to debt the company employs to finance its operating assets.
0.680.481.831.612.212.381.651.361.921.93
Working Capital Days
This is the number of days that a company will take to convert its working capital into revenue.
78808488128149133138134127
Cash Conversion Cycle
Cash Conversion Cycle is a company's net working capital (creditors, debtors and inventory) expressed in terms of days
-32-16-1812252633514536
Management Assessment
Management Assessment
An assessment of the trustworthiness of the management based on 5 important parameters. These parameters are colour coded as
Green (Very Good), Orange (Somewhat Good) and Red (Not Good)
What do we look at?
Management Assessment: An assessment of the trustworthiness of the management based
on 5 important parameters. These parameters are colour coded as Green (Very Good),
Orange (Somewhat Good) and Red (Not Good)
Corporate Governance
Corporate Governance
This refers to a set of processes or laws that affects the way a company is directed and controlled.
Board Credentials
Board credentials
This refers to the skill sets (qualification, experience, etc.) that the management team of a company possesses.
Promoter's holding
Promoter's holding
This refers to the stake that the promoters hold in a company and proportion of shares pledged.
Transparency
Transparency
Transparency refers to the practices that a company follows in the disclosure of important and necessary information.
Integrity
Integrity
Integrity refers to the application of honest and fair business practices.

Percentage Holding
31.35%
42.93%
23.31%
2.42%

Pledged *35.3735.1335.060.000.000.000.003.413.393.393.283.283.286.576.576.576.576.577.369.00
*  Pledged shares as % of Promoter's holding (%)

On Standalone basis: Tata Steel India has performed robustly in all its parameters in the last 10 years. Its Net Sales have grown by 18% CAGR showing consistent demand. Also, a strong re-investment into the business along with an improvement in margins has helped the company grow its Earnings per Share (EPS) by more than 30% over the years. However on the ROE & ROIC front it has shown a weakening performance with a declining trend. The fall ... Read more

On Standalone basis: Tata Steel India has performed robustly in all its parameters in the last 10 years. Its Net Sales have grown by 18% CAGR showing consistent demand. Also, a strong re-investment into the business along with an improvement in margins has helped the company grow its Earnings per Share (EPS) by more than 30% over the years. However on the ROE & ROIC front it has shown a weakening performance with a declining trend. The fall in ROE is mainly due to the substantial increase in interest costs. Similarly from a high of 41% in FY05, ROIC has come down to around 10% in FY2011. This fall in ROIC can also be attributed to the continuous increase of debt on books. The company’s debt has increased from Rs. 9600 Cr. in 2007 to Rs. 28000 Cr. currently. This has led to a rise in Debt-to Net Profit ratio (5) and Debt-to-Equity ratio (0.66).

On consolidated basis, Tata Steel has shown a massive jump in net sales since FY 2008 after the acquisition of Corus. This acquisition took Tata Steel’s revenues from Rs. 25117 Cr. (FY07) to Rs. 1,31,498 Cr. (FY08). Its profits too increased from Rs. 4,174 Cr. to Rs. 7,359 Cr. in the same period. Further in FY09 the company registered a good sales growth of 12% and a profit growth of 3.5%. But, in FY10 the company’s sales fell and it registered losses of Rs. 2009 Cr. as a result of the slowdown in the European markets and lower production from Corus. The company’s debt on a consolidated basis is very high at Rs. 60,000 Cr. which includes a major chunk of Corus’ debt burden.

Margins: Historically, Tata Steel has maintained best profit margins amongst integrated steel players. On standalone basis Tata Steel has shown impressive improvements in its profit margin ratios over the last 10 years. From FY2005 the company has maintained operating profit margin in the range of 38-40% and Net Margin around 20%. But, on consolidated level, margins are much lower mainly due to heavy debt burdens and slowdown in its European operations and marjet. Though, considering the company’s planned debt restructuring/repayments; we can expect significant improvement in its NPM and operating margins.

Thus, while Tata Steel’s financial performance has been good mainly due to rising steel demand over the years, its balance sheet reflects a rising debt position causing lower net margin making it relatively a risky company as far as financial performance is considered. Considering this, we can say that Tata Steel’s 10 YEAR X-RAY is Red (Not Good)

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