Tata Steel, Coal India, Hero MotoCorp from Nifty 50 hit 52-week lows

These stocks were down in the range of 1 per cent to 3 per cent in intra-day trades. They have corrected by up to 35 per cent from their respective 52-week highs

Share prices of Tata Steel, Coal India and Hero MotoCorp from the Nifty 50 index have hit their respective 52-week lows on the National Stock Exchange (NSE) in Friday’s intra-day trade on concerns of a weak outlook. These stocks are down in the range of 1 per cent to 3 per cent. They have corrected by up to 35 per cent from their respective 52-week highs.

 

Among the individual stocks, Tata Steel hit a 52-week low of Rs 126.70, down 2.5 per cent in intra-day deal. The stock of the Tata group company has fallen below its previous low of Rs 128.10, touched in January 2024. 

 

 

In one month, Tata Steel has underperformed the market by declining 17 per cent. In comparison, the Nifty Metal and the Nifty 50 indices are down 12.2 per cent and 4.4 per cent, respectively.

 

Tata Steel is a leading global steel manufacturer. It operates in more than 26 countries, with key operations in India, the Netherlands and the UK. The company serves customers in the automotive, construction, engineering, energy and power sectors.

 

Analysts at JM Financial Institutional Securities estimate in Q3, Tata Steel’s blended realisations to decline by approximately Rs 2500 per ton quarter-on-quarter (QoQ) led by lower flats prices. Standalone volumes came in at 5.29 million tons for Q3 (+4 per cent QoQ). The brokerage firm estimates earnings before interest, tax, depreciation and amortisation (Ebitda) per ton to decline sequentially to Rs 11,313 (down by around Rs 2,200 led by lower realisations).

 

Though there are near-term challenges related to high imports and lower realisations, the long-term outlook remains strong for Tata Steel. While the India business is expected to continue its strong performance, improving performance in Europe business would support overall earnings, according to analysts.

 

The company's European business continues to remain a drag while Indian operations are strong, catering to a strong domestic market. FY26 is likely to be capex light for Tata Steel as KPO-II capex will be near completion in FY25 and capex for UK EAF transition for the next 18-24 months will not be significant and will pick up only towards the last 12-16 months, Axis Securities said in the company's Q2 results update.

 

Separately, shares of Hero MotoCorp (HMCL) hit a 52-week low of Rs 4,086.40, down 1 per cent in intra-day trades. In one month, the market price of the two-wheeler company has declined 12 per cent.

 

HMCL is India’s leading two-wheeler manufacturer, with a nearly 32 per cent share of the domestic motorcycle market in volume terms. The company has eight manufacturing facilities — six in India and one each in Colombia and Bangladesh.

 

While demand growth is expected to moderate following the strong festive season, the upcoming marriage season and the expected recovery in rural sales should support retail growth. The expansion of exclusive stores for premium products and upgrades to the dealership network will likely attract new customers. Moreover, the company’s aggressive plans to grow its electric vehicle (EV) business, particularly with attaining scale, are expected to reduce losses in the EV segment as more affordable products are introduced and volumes increase, Mirae Asset Sharekhan said.

 

With HMCL looking at an aggressive product launch plan, it is exposed to product failure risks. Further, the increase in raw-material costs and increasing competition along with delayed recovery in the rural market would stem its growth prospects, the brokerage firm said. Mirae Asset Sharekhan retained its 'Buy' rating on HMCL with an unchanged target price (TP) of Rs 6,057, driven by healthy recovery in Ebitda margin, strong product response, a continuous focus on premiumisation, and expansion into the EV market.

 

Elsewhere, shares of Coal India touched a 52-week low of Rs 364.70, falling 2 per cent in intra-day trades. It corrected 33 per cent from its 52-week high level of Rs 543.55, touched on August 26, 2024.

 

Over the past 12-18 months, investors were enthused by a large-cap stock delivering volumes growth at a compound annual growth rate (CAGR) of 7-8 per cent, alongside an improving demand outlook resulting in solid earnings momentum. Analysts at Emkay Global Financial Services said they were also subscribed to this narrative for Coal India; however, the growth air-pocket in recent months has weakened that thesis. 

 

The brokerage firm sees the company missing its FY25 guidance by 35- 40mt (4.5 per cent), and therefore, reduced its estimate to 800mt. In addition, there has been news flow around progress on captive coal mines that could displace the e-auction volumes. 

 

“In our assessment, these captive mines could produce 26mt in FY28E, displacing a third of the e-auction offtake. All that said, we think the concerns are broadly in the price, whereas the medium-term demand growth outlook and project delivery catalysts are well-placed. We, therefore, reiterate our 'Buy' rating, albeit at a reduced TP of Rs 525,” the brokerage firm said in the company's update.