Tata Steel Limited (TATASTEEL.NS) Discounted Future Market Cap

Tata Steel Limited

TATASTEEL.NS (NSE)

Valuation
Tata Steel Limited Discounted Future Market Cap

"""
    Model: Discounted Future Market Cap

# Render model description
model.render_description(r"""
## Discounted Future Market Cap

This model estimates the intrinsic value of a common share by projecting the Future Market Capitalization using the estimated PE Ratio and then discounting it to the Present using an Annual Required Rate of Return.
""")

# Initialize assumptions
assumptions.init({
    "data": {
        "%discount_rate": None,
        "beta": data.get("profile:beta", default=1),
        "%risk_free_rate": data.get("treasury:year10"),
        "%market_premium": data.get("risk:totalEquityRiskPremium"),
        "pe_ratio": data.get("ratio:priceEarningsRatio"),
        "%revenue_growth_rate": None,
        "%net_income_margin": None,
        "historical_years": 10,
        "projection_years": 5,
    },
    "hierarchies": [{
        "parent": "%discount_rate",
        "children": ["beta", "%risk_free_rate", "%market_premium"]
    }]
})

# Calculate cost of equity
cost_of_equity = assumptions.get("%risk_free_rate") + assumptions.get("beta") * assumptions.get("%market_premium")
assumptions.set("%discount_rate", cost_of_equity)

# Compute metrics
data.compute({
    "%grossMargin": "income:grossProfit / income:revenue",
    "%operating_margin": "income:operatingIncome / income:revenue",
    "%netMargin": "income:netIncome / income:revenue",
    "%revenueGrowthRate": "function:growth:income:revenue",
    "%netIncomeGrowthRate": "function:growth:income:netIncome",
    "%totalStockholdersEquityGrowthRate": "function:growth:balance:totalStockholdersEquity",

# Calculating NOPAT (Net Operating Profit After Taxes)
    "%taxRate": "income:incomeTaxExpense / income:incomeBeforeTax",
    "incomeTax": "income:operatingIncome * %taxRate",
    "nopat": "income:operatingIncome - incomeTax",

# Calculating Invested Capital
    "investedCapital": [
        "balance:totalNonCurrentAssets", "-", "balance:cashAndCashEquivalents", "+",
        "balance:totalCurrentAssets", "-", "balance:totalCurrentLiabilities"
    ],
    "%roic": "nopat / investedCapital",
})

data.set_default_range(f"{-assumptions.get('historical_years')}->0")

assumptions.set("%net_income_margin", data.average(f"%netMargin"))
assumptions.set_bounds(
    "%net_income_margin", low=0, high="100%"
)

assumptions.set("%revenue_growth_rate", data.average(f"%revenueGrowthRate"))
assumptions.set_bounds(
    "%revenue_growth_rate", low=0, high="25%"
)

# Compute forecasted values and ratios
data.compute({
    "income:revenue": f"""
        income:revenue:-1 * 
        (1 + {assumptions.get('%revenue_growth_rate')})
    """,
    "%revenueGrowthRate": "function:growth:income:revenue",
    "income:netIncome": f"income:revenue * {assumptions.get('%net_income_margin')}",
}, forecast=assumptions.get("projection_years"))

projected_revenue = data.get("income:revenue")
projected_net_income = data.get(f"income:netIncome:{assumptions.get('projection_years')}")

shares_outstanding = data.get("income:weightedAverageShsOut")
future_market_cap = assumptions.get("pe_ratio") * projected_net_income
discounted_future_market_cap = future_market_cap / (
            (1 + assumptions.get("%discount_rate")) ** assumptions.get("projection_years"))

stock_value = discounted_future_market_cap / shares_outstanding

# Set the final value
model.set_final_value({
    "value": stock_value,
    "units": "$"
})

# Render results
model.render_results([
    [stock_value, "Present Value", "$"],
    [projected_net_income, "Estimated net income", "$"],
    [future_market_cap, "Estimated market capitalization", "$"],
    [discounted_future_market_cap, "Market capitalization discounted to present", "$"],
    [shares_outstanding, "Shares Outstanding", "#"],
    [data.get("income:eps"), "Earnings Per Share (EPS)", "$"],
    [data.get("profile:price"), "Market Price", "$"],
    [data.get("ratio:priceEarningsRatio"), "Price to Earnings (PE) Ratio", "#"]
])

# Render chart
model.render_chart({
    "data": {
        "income:revenue": "Revenue",
        "income:netIncome": "Net Income"
    },
    "start": -assumptions.get("historical_years"),
    "end": "*",
    "properties": {
        "title": "Historical and forecasted data",
        "set_editable": [
            "income:revenue",
            "income:netIncome"
        ]
    }
})

# Render table for estimated future values
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "%revenueGrowthRate": "Revenue Growth Rate",
        "income:netIncome": "Net Income",
    },
    "start": -1,
    "end": "*",
    "properties": {
        "title": "Estimated Future Values",
        "order": "ascending",
        "number_format": "M"
    }
})

# Render historical values table
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "income:costOfRevenue": "Cost of Revenue",
        "income:grossProfit": "Gross Profit",
        "%grossMargin": "Gross Margin",
        "income:operatingIncome": "Operating Income",
        "%operating_margin": "Operating Margin",
        "income:netIncome": "Net Income",
        "%netMargin": "Net Margin",
    },
    "start": -assumptions.get("historical_years"),
    "end": 0,
    "properties": {
        "title": "Historical Values",
        "display_averages": True,
        "order": "descending",
        "number_format": "M"
    },
})

# Render historical growth rates table
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "%revenueGrowthRate": "Revenue Growth Rate",
        "income:netIncome": "Net Income",
        "%netMargin": "Net Margin",
        "%netIncomeGrowthRate": "Net Income Growth Rate",
        "balance:totalStockholdersEquity": "Stockholders Equity",
        "%totalStockholdersEquityGrowthRate": "Equity Growth Rate",
        "%roic": "Return on Invested Capital (ROIC)",
        "nopat": "After-tax Operating Income",
        "%taxRate": "Income Tax Rate",
        "investedCapital": "Invested Capital",
    },
    "start": -assumptions.get("historical_years"),
    "end": 0,
    "properties": {
        "title": "Historical Growth Rates",
        "display_averages": True,
        "order": "descending",
        "number_format": "M"
    },
})

# Set description for assumptions
assumptions.set_description({
    "%discount_rate": r"""
        ## Discount Rate

`Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium`

The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula.

[Read More](https://www.investopedia.com/terms/c/costofequity.asp#mntl-sc-block_1-0-20)
    """,

"beta": r"""
        ## Beta

Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.
    """,

"%risk_free_rate": r"""
        ## Risk-Free Rate

The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time.
        By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.
    """,

"%market_premium": r"""
        ## Market Premium

Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.
    """,

"pe_ratio": r"""
        ## Price to Earnings (PE) Ratio

Estimated Price to Earnings (PE) Ratio at the end of the projection period.

`Future Market Cap` = `PE Ratio` * `Projected Net Income`
    """,

"%revenue_growth_rate": r"""
        ## Revenue Growth Rate

The annual revenue growth rate is applied to projected revenue starting from the second projection year onward.
    """,

"%net_income_margin": r"""
        ## Net Income Margin

Net Income expressed as a percentage of Revenue.
    """,

"historical_years": r"""
        ## Historical Years

The number of historical years used to calculate averages for historical data.
    """,

"projection_years": r"""
        ## Projection Years

The number of years for projecting the analysis into the future.
    """,
})

print("End of model.")

Estimated Value

INR

Market Price INR

* Values are not guaranteed, please do your own
research before making investment decisions.

Discounted Future Market Cap

Interactive Assumptions

Discount Rate Discount Rate `Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium` The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula. Read More	%
↳ Beta Beta Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.	#
↳ Risk Free Rate Risk-Free Rate The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time. By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.	%
↳ Market Premium Market Premium Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.	%
Pe Ratio Price to Earnings (PE) Ratio Estimated Price to Earnings (PE) Ratio at the end of the projection period. `Future Market Cap` = `PE Ratio` * `Projected Net Income`	#
Revenue Growth Rate Revenue Growth Rate The annual revenue growth rate is applied to projected revenue starting from the second projection year onward.	%
Net Income Margin Net Income Margin Net Income expressed as a percentage of Revenue.	%
Historical Years Historical Years The number of historical years used to calculate averages for historical data.	#
Projection Years Projection Years The number of years for projecting the analysis into the future.	#

Results
Present Value	185.9 INR
Estimated net income	111.2 Bil. INR
Estimated market capitalization	3,714 Bil. INR
Market capitalization discounted to present	2,316 Bil. INR
Shares Outstanding	12.46 Bil.
Earnings Per Share (EPS)	5.46 INR
Market Price	182.6 INR
Price to Earnings (PE) Ratio	33.41

Historical and forecasted data

Monetary values in INR

{"sectionId": "section-chart-1", "sectionType": "chart", "title": "Historical and forecasted data", "timeseries": "annual", "series": [{"label": "Revenue", "mappingKey": "income:revenue", "data": [{"l": "2016", "x": "2016-03-31", "y": 1063399200000}, {"l": "2017", "x": "2017-03-31", "y": 1174199400000}, {"l": "2018", "x": "2018-03-31", "y": 1241096900000}, {"l": "2019", "x": "2019-03-31", "y": 1576689900000}, {"l": "2020", "x": "2020-03-31", "y": 1489717100000}, {"l": "2021", "x": "2021-03-31", "y": 1564774000000}, {"l": "2022", "x": "2022-03-31", "y": 2439591700000}, {"l": "2023", "x": "2023-03-31", "y": 2433526900000}, {"l": "2024", "x": "2024-03-31", "y": 2291707800000}, {"l": "2025", "x": "2025-03-31", "y": 2185425100000}, {"l": "2026", "x": "2026-03-31", "y": 2315239350940, "oy": 2315239350940, "e": true, "d": 2026, "g": 5.94, "og": 5.94}, {"l": "2027", "x": "2027-03-31", "y": 2452764568385, "oy": 2452764568385, "e": true, "d": 2027, "g": 5.94, "og": 5.94}, {"l": "2028", "x": "2028-03-31", "y": 2598458783747, "oy": 2598458783747, "e": true, "d": 2028, "g": 5.94, "og": 5.94}, {"l": "2029", "x": "2029-03-31", "y": 2752807235502, "oy": 2752807235502, "e": true, "d": 2029, "g": 5.94, "og": 5.94}, {"l": "2030", "x": "2030-03-31", "y": 2916323985291, "oy": 2916323985291, "e": true, "d": 2030, "g": 5.94, "og": 5.94}], "dataType": ".", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}, {"label": "Net Income", "mappingKey": "income:netIncome", "data": [{"l": "2016", "x": "2016-03-31", "y": -3827800000}, {"l": "2017", "x": "2017-03-31", "y": -42408000000}, {"l": "2018", "x": "2018-03-31", "y": 134343300000}, {"l": "2019", "x": "2019-03-31", "y": 102183300000}, {"l": "2020", "x": "2020-03-31", "y": 15565400000}, {"l": "2021", "x": "2021-03-31", "y": 74902200000}, {"l": "2022", "x": "2022-03-31", "y": 401539300000}, {"l": "2023", "x": "2023-03-31", "y": 87604000000}, {"l": "2024", "x": "2024-03-31", "y": -44374400000}, {"l": "2025", "x": "2025-03-31", "y": 34205100000}, {"l": "2026", "x": "2026-03-31", "y": 88256924057, "oy": 88256924057, "e": true, "d": 2026, "g": 158.0, "og": 158.0}, {"l": "2027", "x": "2027-03-31", "y": 93499385346, "oy": 93499385346, "e": true, "d": 2027, "g": 5.94, "og": 5.94}, {"l": "2028", "x": "2028-03-31", "y": 99053248836, "oy": 99053248836, "e": true, "d": 2028, "g": 5.94, "og": 5.94}, {"l": "2029", "x": "2029-03-31", "y": 104937011817, "oy": 104937011817, "e": true, "d": 2029, "g": 5.94, "og": 5.94}, {"l": "2030", "x": "2030-03-31", "y": 111170270319, "oy": 111170270319, "e": true, "d": 2030, "g": 5.94, "og": 5.94}], "dataType": ".", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}], "editableDates": {"2026-03-31": 22, "2027-03-31": 23, "2028-03-31": 24, "2029-03-31": 25, "2030-03-31": 26}, "properties": {"display_table": true}, "width": "full"}

Edit Chart Values	2026-03-31	2027-03-31	2028-03-31	2029-03-31	2030-03-31

↳ Growth Rate

Estimated Future Values

Monetary values in INR amounts except #	2025 Mar 31	LTM Jan 14	2026 Mar 31	2027 Mar 31	2028 Mar 31	2029 Mar 31	2030 Mar 31
Revenue	2,185,425	2,212,606	2,315,239	2,452,765	2,598,459	2,752,807	2,916,324
Revenue Growth Rate	-4.64%	1.24%	5.94%	5.94%	5.94%	5.94%	5.94%
Net Income	34,205	68,069	88,257	93,499	99,053	104,937	111,170

Monetary values in INR

amounts except #

2025
Mar 31

LTM
Jan 14

2026
Mar 31

2027
Mar 31

2028
Mar 31

2029
Mar 31

2030
Mar 31

Revenue

2,185,425

2,212,606

2,315,239

2,452,765

2,598,459

2,752,807

2,916,324

Revenue Growth Rate

-4.64%

1.24%

5.94%

Net Income

34,205

68,069

88,257

93,499

99,053

104,937

111,170

Historical Values

Monetary values in INR amounts except #	Average	LTM Jan 14	2025 Mar 31	2024 Mar 31	2023 Mar 31	2022 Mar 31	2021 Mar 31	2020 Mar 31	2019 Mar 31	2018 Mar 31	2017 Mar 31	2016 Mar 31
Revenue	1,788,430	2,212,606	2,185,425	2,291,708	2,433,527	2,439,592	1,564,774	1,489,717	1,576,690	1,241,097	1,174,199	1,063,399
Cost of Revenue	791,399	1,030,109	1,043,722	1,127,812	1,232,216	902,774	623,744	683,864	659,214	510,422	439,741	451,765
Gross Profit	997,032	1,182,497	1,141,703	1,163,896	1,201,310	1,536,817	941,030	805,853	917,476	730,675	734,458	611,634
Gross Margin	56.38%	53.44%	52.24%	50.79%	49.36%	62.99%	60.14%	54.09%	58.19%	58.87%	62.55%	57.52%
Operating Income	741,508	708,531	883,653	909,272	939,293	1,269,619	712,074	583,075	686,688	530,468	531,833	402,087
Operating Margin	41.53%	32.02%	40.43%	39.68%	38.6%	52.04%	45.51%	39.14%	43.55%	42.74%	45.29%	37.81%
Net Income	75,255	68,069	34,205	-44,374	87,604	401,539	74,902	15,565	102,183	134,343	-42,408	-3,828
Net Margin	3.81%	3.08%	1.57%	-1.94%	3.6%	16.46%	4.79%	1.04%	6.48%	10.82%	-3.61%	-0.36%

Historical Growth Rates

Monetary values in INR amounts except #	Average	LTM Jan 14	2025 Mar 31	2024 Mar 31	2023 Mar 31	2022 Mar 31	2021 Mar 31	2020 Mar 31	2019 Mar 31	2018 Mar 31	2017 Mar 31	2016 Mar 31
Revenue	1,788,430	2,212,606	2,185,425	2,291,708	2,433,527	2,439,592	1,564,774	1,489,717	1,576,690	1,241,097	1,174,199	1,063,399
Revenue Growth Rate	5.94%	1.24%	-4.64%	-5.83%	-0.249%	55.91%	5.04%	-5.52%	27.04%	5.7%	10.42%	-23.77%
Net Income	75,255	68,069	34,205	-44,374	87,604	401,539	74,902	15,565	102,183	134,343	-42,408	-3,828
Net Margin	3.81%	3.08%	1.57%	-1.94%	3.6%	16.46%	4.79%	1.04%	6.48%	10.82%	-3.61%	-0.36%
Net Income Growth Rate	82.05%	99%	-177.1%	-150.7%	-78.18%	436.1%	381.2%	-84.77%	-23.94%	-416.8%	1,008%	-90.25%
Stockholders Equity	765,347	949,473	911,696	920,358	1,030,821	1,144,430	742,388	735,763	689,251	608,706	378,193	307,738
Equity Growth Rate	12.08%	4.14%	-0.941%	-10.72%	-9.93%	54.16%	0.9%	6.75%	13.23%	60.95%	22.89%	-8.53%
Return on Invested Capital (ROIC)	38.97%	22.45%	18.15%	231.7%	23.29%	58.88%	24.91%	-27.33%	23.39%	30.39%	-5.54%	28.33%
After-tax Operating Income	647,585	424,488	333,361	3,891,906	415,962	1,055,326	421,256	-495,227	396,637	444,597	-65,442	300,569
Income Tax Rate	24.43%	40.09%	62.27%	-328%	55.72%	16.88%	40.84%	184.9%	42.24%	16.19%	112.3%	25.25%
Invested Capital	1,626,386	1,891,117	1,836,963	1,679,392	1,785,967	1,792,455	1,690,880	1,812,166	1,695,727	1,463,130	1,181,604	1,060,845