Neutral TATA Steel; target of Rs 180: Motilal Oswal

Motilal Oswal's research report on TATA Steel

Tata Steel (TATA) is pursuing an aggressive capacity expansion strategy in India to capitalize on the rising domestic demand. The company has outlined a target to double its crude steel capacity from the current 21.6MTPA to 40MTPA by FY30, with an annual capex commitment of ~INR100b. TATA commissioned India’s largest BF at Kalinganagar in FY25, increasing the capacity from 3MTPA to 8MTPA, backed by an investment of INR270b. The capacity ramp-up is currently on track and in phase-II of expansion. Management aims to increase the capacity by another 5MTPA, bringing the total to 13MTPA. Other initiatives include scaling Neelachal Ispat Nigam Ltd (NINL) from 1MTPA to 5.5MTPA, and commissioning a 0.75MTPA scrapbased electric arc furnace in Ludhiana by 2026. The company also plans to expand the Meramandali unit from 5 MTPA to 6.5 MTPA, aligning with broader capacity goals.

Outlook

At CMP, TATA is trading at 7.6x EV/EBITDA and 4.1x FY27E P/B. We believe that all the positives are well priced in. We reiterate our Neutral rating with an SOTP-based TP of INR180 per share on FY27 estimate.

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TATA Steel - 23 - 09 - 2025 - moti