Motilal Oswal Financial Services (MOFSL) has upgraded Tata Steel to Buy from Neutral, citing strong domestic demand, improving realizations, and operational efficiencies.
The brokerage set a target price of Rs 210 per share (based on September 2027 estimates), implying a potential 19 per cent upside from current levels. InCred Equities and Nomura India are two brokerages, which recently suggested upside targets for Tata Steel.
On Tuesday, the stock was trading 0.85 per cent higher at Rs 178.10. MOFSL said Tata Steel, one of India’s largest steel producers, stands to benefit from improving steel price realisations and supportive policy measures such as the proposed 12 per cent safeguard duty on flat steel products, which could aid domestic margins. While near-term uncertainty persists due to global tariff concerns, the long-term growth outlook remains robust, it added.
Tata Steel’s Indian operations are expected to maintain strong momentum, while performance in Europe is gradually improving due to restructuring and cost optimisation. MOFSL expects the European business to move toward breakeven as energy costs fall and efficiencies improve, with EBITDA/t projected to rise from $8 in Q1FY26 to $70 by FY28. Consolidated Ebitda per tonne is forecast to increase to Rs 13,000 by FY28 from Rs 8,376 in FY25.
Tata Steel’s operating cash flow (OCF) is projected at Rs 95,700 crore, providing sufficient headroom to fund its annual expansion capex of Rs 16,000 crore without increasing leverage. Net debt stood at Rs 84,800 crore as of June 2025, including cash of Rs 14,100 crore, translating into a net debt-to-Ebitda ratio of 3.21 times. At current market prices, the stock trades at 6.8 times EV/Ebitda and 1.9 times FY27 price-to-book.
Tata Steel is expanding its Indian capacity aggressively-from 26.5 mtpa in FY25 to 40 mtpa by FY30-to capitalise on rising domestic demand, which is projected to grow 8-10 per cent annually over FY26-27. Key projects include expanding Kalinganagar to 13 mtpa, scaling NINL to 4.5 mtpa, commissioning a 0.75 mtpa electric arc furnace in Ludhiana by FY27, and expanding Meramandali to 8.2 mtpa.
In Europe, Tata Steel is transitioning toward green steelmaking, converting its Port Talbot plant in the UK into a 3 mtpa EAF facility and evaluating a gas-based DRI + EAF model at IJmuiden in the Netherlands. The domestic brokerage said these initiatives, supported by policy clarity and operational efficiencies, should drive a sustained recovery in European profitability.