Tata Steel Gains 2.05%: 3 Key Factors Driving This Week’s Momentum

2 February: Valuation Upgrade Signals Attractive Entry Point

Tata Steel began the week on a cautious note, closing at Rs.188.60, down 2.33% from the previous Friday’s close of Rs.193.10. This decline came despite a positive sector outlook, as the company’s valuation metrics underwent a significant shift that day. The price-to-earnings (P/E) ratio improved to 31.12, marking a transition from fair to attractive valuation territory relative to peers such as JSW Steel and Jindal Steel, whose P/E ratios remained elevated at 36.32 and 34.69 respectively.

The price-to-book value of 2.44 and an enterprise value to EBITDA (EV/EBITDA) ratio of 11.08 further reinforced the stock’s appeal. The PEG ratio stood at a compelling 0.25, signalling undervaluation when adjusted for growth prospects. These valuation improvements reflected growing market confidence in Tata Steel’s operational efficiency and growth potential amid sectoral volatility.

Despite the day’s price dip, the stock remained well above its 52-week low of Rs.124.20 and was approaching its 52-week high of Rs.202.90, suggesting consolidation after a strong rally. The company’s return on capital employed (ROCE) and return on equity (ROE) at 9.81% and 7.84% respectively, supported the valuation upgrade, highlighting efficient capital utilisation and stable profitability.

3 February: Intraday High with 3.0% Surge Amid Sector Momentum

The following day, Tata Steel rebounded strongly, closing at Rs.192.95, a 2.31% gain that outpaced the Sensex’s 2.63% rise. The stock opened with a gap-up of 2.47% and reached an intraday high of Rs.196.30, marking a 4.08% increase from the prior close. This surge reflected robust buying interest and positive technical momentum, with the stock trading above all key moving averages including the 5-day, 20-day, 50-day, 100-day, and 200-day averages.

This technical strength underscored the stock’s solid upward trend and resilience within the ferrous metals sector, which itself gained 3.37% that day. Tata Steel’s proximity to its 52-week high—just 4.45% shy—highlighted sustained investor confidence. The company’s Mojo Score was upgraded to 81.0, categorised as a 'Strong Buy' by MarketsMOJO, reflecting improved financial metrics and market positioning.

Over multiple time horizons, Tata Steel’s returns significantly outperformed the Sensex, with a one-year gain of 47.04% versus the Sensex’s 8.64%, and a ten-year return of 808.77% compared to the Sensex’s 246.19%. This strong relative performance reinforced the stock’s appeal amid broader market volatility.

4 & 5 February: Steady Gains Amid Mixed Market Conditions

On 4 February, Tata Steel continued its upward trajectory, closing at Rs.195.25, up 1.19%, while the Sensex rose modestly by 0.37%. The stock’s volume remained healthy at over 17 lakh shares, supporting the price advance. The following day, 5 February, Tata Steel gained another 1.23% to close at Rs.197.65, despite the Sensex declining 0.53%. This divergence highlighted the stock’s relative strength and defensive qualities within a fluctuating market environment.

6 February: Q3 FY26 Earnings Reveal 272% Profit Surge

The week concluded with Tata Steel reporting a stellar quarterly performance, posting a 272% surge in profit for Q3 FY26. This remarkable turnaround was driven by a revival in the steel sector, improved operational efficiencies, and favourable market conditions. The earnings announcement reinforced the positive sentiment that had been building throughout the week and provided a fundamental catalyst for the stock’s sustained strength.

Despite a slight dip of 0.30% on the day to close at Rs.197.05, the stock ended the week near its highest levels, reflecting investor confidence in the company’s growth trajectory and sector outlook. The strong earnings performance also validated the earlier valuation upgrades and technical momentum observed in the preceding sessions.

Daily Price Performance vs Sensex

Key Takeaways

Positive Signals: Tata Steel’s valuation upgrade to attractive multiples, supported by improved P/E, P/BV, EV/EBITDA, and PEG ratios, signals enhanced market confidence. The stock’s technical strength, demonstrated by consistent gains and trading above key moving averages, underpinned its outperformance relative to the Sensex. The 272% profit surge in Q3 FY26 provides a strong fundamental catalyst, validating the stock’s upward momentum and growth prospects.

Cautionary Notes: The stock experienced a sharp decline on 2 February despite the valuation upgrade, reflecting short-term volatility. The ferrous metals sector remains cyclical and sensitive to global commodity prices and demand fluctuations, which could impact earnings visibility. Investors should monitor Tata Steel’s execution on cost controls and capacity utilisation to sustain the positive trend.

Conclusion

Tata Steel Ltd’s performance during the week of 2 to 6 February 2026 was characterised by a blend of valuation improvement, technical resilience, and a strong earnings turnaround. The stock’s 2.05% weekly gain outpaced the Sensex’s 1.51% rise, reflecting its relative strength amid mixed market conditions. The valuation shift to attractive levels, combined with a robust 272% profit increase in Q3 FY26, positions Tata Steel as a noteworthy player within the ferrous metals sector. While short-term volatility remains a factor, the company’s operational metrics and sector positioning provide a solid foundation for continued investor interest.

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