December 14, 2023
Top 10 Stock Tata Steel Sell Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Tata Steel – Top 10 Stock in Bombay Stock Exchange Sensitive Index BSE Sensex
Tata Steel is listed as a top 10 stock on December 14, 2023 in the market index BSE Sensex because of its high performance in at least one of the Obermatt investment strategies. Only one consolidated Obermatt Rank is above-average. The company is growing above average, but all other facts speak against a stock purchase, especially the low market sentiment by professional investors. Based on the Obermatt 360° View of 16 (16% performer), Obermatt issues an overall sell recommendation for Tata Steel on December 14, 2023.
Snapshot: Obermatt Ranks
| Country | India |
| Industry | Steel |
| Index | BSE Sensex, Good Governace Growth Markets, Independent Boards Growth Markets, CNX Nifty 50 |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Tata Steel Sell
| 360 METRICS | December 14, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 45 |
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| GROWTH | ||||||||
| GROWTH | 65 |
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| SAFETY | ||||||||
| SAFETY | 7 |
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| SENTIMENT | ||||||||
| SENTIMENT | 20 |
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| 360° VIEW | ||||||||
| 360° VIEW | 16 |
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ANALYSIS: With an Obermatt 360° View of 16 (better than 16% compared with alternatives), overall professional sentiment and financial characteristics for the stock Tata Steel are critical, mostly below average. The 360° View is based on consolidating four consolidated indicators, with three out of four indicators below average for Tata Steel. The consolidated Growth Rank has a good rank of 65, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth, as well as stock returns. It ranks higher than 65% of competitors in the same industry. The other indicators are below average, namely the Value, Safety, and Sentiment Ranks.The Value Rank at 45 means that the share price of Tata Steel is on the high side compared with its peers regarding revenues, profits, and invested capital. The stock price is higher than for 55% of alternative stocks in the same industry. The consolidated Safety Rank has a riskier rank of 7, which means that the company has a riskier financing structure than 93% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. The consolidated Sentiment Rank also has a low rank of 20, indicating professional investors are more pessimistic about the stock than for 80% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated 360° View of 16, Tata Steel is worse than 84% of all alternative stock investment opportunities based on the Obermatt Method. This means that Tata Steel shares are on the riskier side for investors. As only one of the consolidated Obermatt Ranks exhibits excellent performance, namely the above-average growth (Growth Rank of 65), it is a riskier stock investment proposition. Aside from the critical professional market sentiment (Sentiment Rank of 20), the company is rather risky when it comes to financing (Safety Rank of 7). The negative market view on Tata Steel may be due to the high stock price (low value). A growth company like this may get too expensive at one point in time. If too many investors are desperate to join the party, they may drive stock prices above reasonable levels. While it is typical for growth companies to have low value, because investors are willing to pay more for companies that are expected to have high growth, the crucial question is: how much more do you pay for the stock of Tata Steel compared with alternatives? You can use the following rule of thumb: The value rank shouldn’t be lower than one minus the growth rank. For example, if the growth rank is at 75, and the value rank is at 5, you should tread carefully. If the value rank is at 40, it still might be a good value (even though it is lower than 50). As market sentiment is critical, you should be careful with paying more than market-average for this stock and conduct further research into the company's future growth potential. ...read more
Sentiment Strategy: Professional Market Sentiment for Tata Steel negative
ANALYSIS: With an Obermatt Sentiment Rank of 20 (better than 20% compared with alternatives), overall professional sentiment and engagement for the stock Tata Steel is critical, mostly below average. The Sentiment Rank is based on consolidating four sentiment indicators, with three out of four metrics below average for Tata Steel. Analyst Opinions are at a rank of 64 (better than 64% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. This is a good sign, were it not for Analyst Opinions Change with a low rank of 37, which means that currently, stock research experts are changing their opinions for the worse. In other words, they are getting more critical of a stock investment in Tata Steel. The Professional Investors rank is also low at 15, meaning that professional investors hold less stock in this company than in 85% of alternative investment opportunities. Pros tend to invest in other companies. Even worse, Market Pulse has a low rank of 15, which means that the current professional news and professional social networks are critical of this company (more negative news than for 85% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 20 (less encouraging than 80% compared with investment alternatives), Tata Steel has a reputation among professional investors that is far below that of its competitors. There are several negative sentiment signals, with only the Analyst Opinions Rank above average. This could be a stock with a long reputation for being positive but where things are worsening. Most analysts may not see it yet, but some have, and the professionals are already quite pessimistic. Proceed with caution when investing in this stock. ...read more
Value Strategy: Tata Steel Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 45 (worse than 55% compared with alternatives), Tata Steel shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, where three out of four indicators are above average for Tata Steel. Price-to-Sales (P/S) is 65 which means that the stock price compared with what market professionals expect for future sales is lower than for 65% of comparable companies, indicating a good value for Tata Steel's revenue size. The same is valid for the Price-to-Book Capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 61. Finally, compared with other companies in the same industry, dividend yields of Tata Steel are expected to be higher than for 59% of all competitors (a Dividend Yield rank of 59). The only low rank is for expected profits with a Price-to-Profit Rank of 43, indicating that the market expects the company's profit to be low despite a high dividend. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 45, is a hold recommendation based on Tata Steel's stock price compared with the company's operational size and dividend yields. The low Profit Rank could result from a one-off charge, for instance, for an accident, a legal settlement, or a restructuring project. If the company keeps its dividends high, the low expected profit may be transitory. If that is the case, the three good value ranks for Sales, Capital, and Dividends are reliable indicators for good stock price value, a low stock price. ...read more
Growth Strategy: Tata Steel Growth Momentum good
| GROWTH METRICS | December 14, 2023 | |||||||
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| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 56 |
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| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 31 |
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| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 55 |
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| STOCK RETURNS | ||||||||
| STOCK RETURNS | 73 |
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| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 65 |
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ANALYSIS: With an Obermatt Growth Rank of 65 (better than 65% compared with alternatives), Tata Steel shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for Tata Steel. Sales Growth has a rank of 56 which means that currently, professionals expect the company to grow more than 56% of its competitors. Capital Growth is also above 31% of competitors with a rank of 55, and Stock Returns with the rank of 73 is also an outperformance. Only Profit Growth is low with a rank of 31 which means that currently, professionals expect the company to grow its profits less than 69% of its competitors. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 65, is a buy recommendation for growth and momentum investors. All three operating growth indicators, namely revenue, profit, and capital growth, are showing improvements. This is a good indication of a company with a positive future. That might, at the same time, be the simple reason why profit growth is low. A growing company needs money and thus can't yet show high profit growth. Look out for signs in corporate communication about extra growth efforts costing time and money. If that is the case, Tata Steel is a good growth stock. ...read more
Safety Strategy: Tata Steel Debt Financing Safety risky
| SAFETY METRICS | December 14, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 16 |
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| REFINANCING | ||||||||
| REFINANCING | 7 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 18 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 7 |
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ANALYSIS: With an Obermatt Safety Rank of 7 (better than 7% compared with alternatives), the company Tata Steel has much riskier financing practices than comparable other companies, which means that their overall debt burden is significantly above the industry average. This doesn't mean that the business of Tata Steel is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with all three metrics below average for Tata Steel. Liquidity is at 18, meaning that the company generates less profit to service its debt than 82% of its competitors. This indicates that the company is on the riskier side when it comes to debt service. Even worse, Leverage is at a rank of 16, meaning the company has an above-average debt-to-equity ratio. It has more debt than 84% of its competitors. Finally, Refinancing is at a rank of 7 which means that the portion of the debt about to be refinanced is above average. It has more debt in the refinancing stage than 93% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 7 (worse than 93% compared with alternatives), Tata Steel has a financing structure that is significantly riskier than that of its competitors. This combination is rather dangerous in most situations. Only very promising companies with bright future outlooks and stellar reputations can operate with such risky financing.
Combined financial peformance: Tata Steel Lowest Financial Performance
| COMBINED PERFORMANCE | December 14, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 45 |
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| GROWTH | ||||||||
| GROWTH | 65 |
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| SAFETY | ||||||||
| SAFETY | 18 |
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| COMBINED | ||||||||
| COMBINED | 19 |
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ANALYSIS: With an Obermatt Combined Rank of 19 (worse than 81% compared with investment alternatives), Tata Steel (Steel, India) shares have lower financial characteristics compared with similar stocks. Shares of Tata Steel are low in value (priced high) with a consolidated Value Rank of 45 (worse than 55% of alternatives), and are riskily financed (Safety Rank of 7, which means above-average debt burdens) but show above-average growth (Growth Rank of 65). ...read more
RECOMMENDATION: A Combined Rank of 19, is a sell recommendation based on Tata Steel's financial characteristics. As the company Tata Steel shows low value with an Obermatt Value Rank of 45 (55% of comparable investments are less expensive), investors should look at the other ranks. In this case, growth is expected to be above-average, better than 65% of comparable companies (Obermatt Growth Rank is 65). This is a typical case. Companies with above average growth tend to cost more than stocks with slower growth expectations. If this is a high-growth company, the low Obermatt Safety Rank of 7 is a good sign. The more debt a well-performing company has, the higher the returns to shareholders. However, if growth turns negative or interest rates increase, high debt may become a burden. If you believe the future is bright for Tata Steel, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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