Accumulate Tata Steel; target of Rs 188: Prabhudas Lilladher

Accumulate

Prabhudas Lilladher's research report on Tata Steel

TATA announced several growth projects for India including the much awaited board approval to increase NINL’s capacity from 1mtpa to 5.8mtpa. It would be a replica of KPO-II blast furnace (BF-BoF) but will be focused on longs product portfolio which would drive efficiencies. Although detailed capex will be announced by Mar’26, it is going to be similar to greenfield capex benchmark as all supporting infrastructure will be built for both the phases to reach 10mtpa. TATA also plans to add a 2.5mtpa Thin Slab Caster & Rolling mill at Meramandali, to enhance thinner-gauge flats capacity, but it would be aligned with furnace relining planned in FY28. TATA has also signed a MoU with Llyod Metals & Energy (LMEL) to partner in the areas of iron ore mining, logistics, pellet and steel making; however, 6mtpa greenfield capex in Maharashtra will depend on the economic feasibility of using low-Fe grade iron ore postbeneficiation.

We cut our estimates by 2-3% on account of current weakness in steel pricing. At CMP, the stock is trading at 6.4x/5.8x EV of FY27/28E EBITDA. We maintain ‘Accumulate’ rating with revised TP of Rs188 (Rs196 earlier) valuing at 7x EV of Sep’27E TSI EBITDA.

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Tata Steel - 12122025 - prabhu