Accumulate Tata Steel; target of Rs 172: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on Tata Steel with a target price of Rs 172 in its research report dated May 31, 2024.

Broker Research

June 04, 2024 / 14:12 IST

Accumulate

26 Aug, 2025 12:21

Volume

Todays L/H

Prabhudas Lilladher's research report on Tata Steel

Tata Steel’s (TATA) 4Q consolidated operating performance was better than PLe on account of stronger Indian ops (TSI) aided by lower other expenses. Tata Steel Europe (TSE) EBITDA loss narrowed significantly from USD178/t to USD69/t even after considering one-time benefit of carbon credits at UK ops. In 1QFY25, TSN is expected to become EBITDA positive on improving realizations, while TSUK is expected to become EBITDA positive from 3QFY25 post closure of furnaces. KPO-II expansion is progressing well with incremental 1.7mt volumes expected in FY25, while TSE volumes will be flattish. TSUK green transition is on track and post closure of heavy end assets by Sep’24, substrate imports from TSI/TSN shall aid TSUK business. Key parameters to watch are a) progress on closure of TSUK BFs and b) ramp-up of KPO-II blast furnace, which shall drive FY26E volume growth. We tweak FY25E/26E EBITDA estimates by -2%/2% considering better TSE profitability aided by TSN’s volume recovery and EBITDA neutral TSUK.

Outlook

We expect EBITDA CAGR of 46% over FY24-26E. At CMP, the stock is trading at 7.7x/5.7x EV of FY25E/FY26E EBITDA. We maintain ‘Accumulate’ rating with revised TP of Rs172 (earlier Rs170) valuing at 6x EV of Mar’26E TSI EBITDA.

For all recommendations report, click here