Neutral Tata Steel; target of Rs 140: Motilal Oswal

Motilal Oswal recommended Neutral rating on Tata Steel with a target price of Rs 140 in its research report dated January 28, 2025.

Broker Research

January 29, 2025 / 21:34 IST

Neutral

26 Aug, 2025 12:21

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Motilal Oswal's research report on Tata Steel

Tata Steel (TATA)’s 3QFY25 revenue came in line at INR328b, -5% YoY (+1% QoQ), primarily due to a weak ASP, which dipped 13% YoY and 2% QoQ to INR61,929/t. The QoQ performance was largely supported by a healthy sales volume of 5.3mt (+8% YoY and 4% QoQ) during the quarter. Crude steel production stood at 5.69mt (+6% YoY/+8% QoQ) and finish steel production was at 5.41mt (+5% YoY/+7% QoQ) in 3QFY25. EBITDA stood at INR75b (YoY/QoQ: -9%/+13%) and was better than our estimate of INR62b. EBITDA/t came in at INR14,179/t (YoY/QoQ: - 16%/+10%), against our estimate of INR11,570/t during the quarter. The beat was primarily led by lower-than-expected costs. Other expenses for the quarter included a write-back of INR14b towards a provision for claims no longer required.

Outlook

We have marginally reduced our revenue/EBITDA estimates by 4%/5% for both FY25/26 and PAT by 5%/10% for FY26/FY27. TATA is trading at 5.6x FY27E EV/EBITDA and 1.6x FY27E P/B. We reiterate our Neutral rating with a revised SOTP-based TP of INR140.

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