Tata Steel Ltd is Rated Buy by MarketsMOJO

Current Rating and Its Significance

On 09 Dec 2025, Tata Steel Ltd’s rating was revised to 'Buy' from 'Hold', accompanied by a notable increase in its Mojo Score from 67 to 77. This rating reflects a positive outlook on the stock, signalling to investors that the company currently exhibits strong fundamentals, attractive valuation, encouraging financial trends, and supportive technical indicators. A 'Buy' rating suggests that the stock is expected to deliver favourable returns relative to its peers and the broader market, making it a compelling addition for investors seeking growth within the ferrous metals sector.

Here’s How Tata Steel Ltd Looks Today

As of 25 December 2025, Tata Steel Ltd demonstrates robust financial health and operational efficiency. The company’s market capitalisation remains in the largecap category, underscoring its significant presence in the ferrous metals sector. The Mojo Score of 77.0 and the accompanying 'Buy' grade reflect a comprehensive assessment of the company’s quality, valuation, financial trend, and technical outlook.

Quality Assessment

The quality grade assigned to Tata Steel Ltd is 'good', supported by high management efficiency and strong profitability metrics. The company boasts a return on capital employed (ROCE) of 15.66%, indicating effective utilisation of capital to generate earnings. This level of ROCE is a positive signal for investors, as it suggests that the company is generating solid returns on its investments. Furthermore, Tata Steel has reported consistent positive results over the last three consecutive quarters, reinforcing the stability and reliability of its earnings stream.

Valuation Perspective

Valuation is a critical factor in the current rating, with Tata Steel Ltd receiving an 'attractive' valuation grade. The company’s ROCE of 9.8 and an enterprise value to capital employed ratio of 1.6 indicate that the stock is trading at a discount relative to its historical valuations and peer averages. This discount presents a value opportunity for investors, especially given the company’s strong earnings growth. The price-to-earnings-to-growth (PEG) ratio stands at a low 0.2, signalling that the stock’s price is favourable compared to its earnings growth potential. Such valuation metrics suggest that Tata Steel Ltd offers a compelling risk-reward profile at current levels.

Financial Trend and Performance

The financial trend for Tata Steel Ltd is rated as 'very positive', reflecting strong growth across key metrics. As of 25 December 2025, the company’s net sales have grown at an annual rate of 11.14%, while operating profit has expanded at an impressive 23.30% per annum. Net profit growth is particularly striking, with a 62.5% increase reported in the latest results. The company’s profit after tax (PAT) for the latest six months stands at ₹5,582.82 crores, representing a remarkable growth of 190.01% compared to previous periods.

Additionally, the operating profit to interest coverage ratio is at a healthy 5.01 times, indicating strong ability to service debt obligations. Profit before tax excluding other income (PBT less OI) has also surged by 109.7% relative to the previous four-quarter average, underscoring the company’s improving profitability and operational leverage. These trends highlight Tata Steel’s capacity to generate sustainable earnings growth, which is a key driver behind its current 'Buy' rating.

Technical Outlook

From a technical perspective, Tata Steel Ltd is rated as 'mildly bullish'. The stock has delivered a year-to-date return of 23.10% and a one-year return of 21.13%, reflecting positive momentum in the market. Over the past six months, the stock has gained 9.82%, while the one-month return stands at 2.84%. These figures indicate steady investor interest and a generally favourable price trend. Despite a minor dip of 0.53% on the most recent trading day, the overall technical signals support the stock’s upward trajectory, complementing the fundamental strengths.

Institutional Confidence

Institutional investors hold a significant stake in Tata Steel Ltd, with 44.88% ownership as of the latest data. This high level of institutional holding is often viewed as a positive indicator, as these investors typically possess greater resources and expertise to analyse company fundamentals. Notably, institutional holdings have increased by 0.9% over the previous quarter, signalling growing confidence in the company’s prospects among professional investors.

What This Rating Means for Investors

For investors, the 'Buy' rating on Tata Steel Ltd indicates a favourable risk-return profile supported by strong operational performance, attractive valuation, and positive market momentum. The company’s solid quality metrics, including high ROCE and consistent profit growth, suggest that it is well-positioned to sustain earnings expansion. The attractive valuation metrics imply that the stock is reasonably priced relative to its growth prospects, offering potential upside without excessive premium.

Moreover, the very positive financial trend and mild bullish technical signals provide additional confidence that the stock’s price could continue to appreciate. Institutional investor interest further validates the company’s fundamentals and outlook. Overall, this rating encourages investors to consider Tata Steel Ltd as a core holding within the ferrous metals sector, particularly for those seeking exposure to a largecap company with strong growth and value characteristics.

Summary

In summary, Tata Steel Ltd’s current 'Buy' rating by MarketsMOJO, last updated on 09 Dec 2025, is underpinned by a combination of good quality, attractive valuation, very positive financial trends, and mildly bullish technicals. The latest data as of 25 December 2025 confirms the company’s strong operational performance and market position, making it a compelling investment opportunity for those looking to capitalise on growth in the ferrous metals sector.

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