Accumulate Tata Steel; target of Rs 181: Prabhudas Lilladher

Prabhudas Lilladher's research report on Tata Steel

We met the management of Tata Steel to gain insights on company's expansion plans and current demand scenario. Tata aims to achieve its stated capacity target of 40mtpa over the next 5 years. KPO-II ramp up is on track with CRM and other finishing lines that would get commissioned in Q2FY26 and drive additional volumes for the next two years. EC for NINL’s 9.5mtpa expansion is in advanced stages, and the management is expected to seek board approval once the EC is obtained. The 0.75mtpa EAF at Ludhiana is on track to get commissioned by Q4FY26. Similar two EAF projects will be undertaken on a fast-track basis once Ludhiana becomes operational and proves viable. The KPO site has sufficient land to commission an additional 8mtpa capacity which will be developed in phases.

Outlook

The stock currently trades at 6.2x/5.6x FY27/28E EBITDA. We maintain Accumulate rating with a revised target price of 181 (earlier 177), valuing the company at 6.5x EV/Sep’27E EBITDA (rolling forward from Mar’27).

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