Buy Tata Steel; target of Rs 210: Motilal Oswal

Motilal Oswal's research report on Tata Steel

Tata Steel (TATA)’s revenue was in line at INR347b (+7% YoY and 12% QoQ). The increase was aided by a rise in domestic deliveries, which was partly offset by a drop in realizations. Steel production stood at 5.4mt (+7% YoY and QoQ), whereas deliveries were in line with our estimates at 5.55mt, up 9% YoY and 17% QoQ. This was largely attributed to the capacity ramp-up at Kalinganagar and the completion of the relining of the G-blast furnace.

Outlook

We largely maintain our earnings estimates. At CMP, TATA is trading at 6.8x FY27E EV/EBITDA and 1.9x FY27E P/B. We reiterate our BUY rating with an SOTP-based TP of INR210 per share on Sep’27E.