The stock price of Tata Steel has come down sharply from Rs.645 levels down to Rs.441, which is a 52-week low for the stock. You can argue that the stock looks attractive in valuation terms because the P/E is less than 4.5X past earnings. But you must remember four key factors that are impacting the performance of Tata Steel.

The profitability of Tata Steel is largely dependent on the global steel prices and that is largely a function of demand from China. With the trade war deepening and Chinese GDP growth down to 6.2% in the last quarter, the stock is definitely under pressure.

The company had expanded capacity aggressively and had also acquired Bhushan Steel on hopes that steel demand will grow three-fold by 2030. Domestic demand has come under pressure due to weak investment cycle and Bhushan Group is caught up in some money-laundering scandal with PNB. That is not great news for Tata Steel.

Input prices are rising (most of the ores that go into steel) and Tata Steel is not able to pass on these costs because of cheap imports being available from China, South Korea, and Japan. Government has supported them with duties but that is short term. In short, immediate cues are not too good. The stock is fundamentally good but for the medium term, the stock may be headed down.