Buy Tata Steel; target of Rs 1500: ICICI Direct

ICICI Direct's research report on Tata Steel

Recently, in its Investor Day, Tata Steel (TSL) laid out its strategic Roadmap 2030. TSL is aiming to double Indian operations steel production capacity to 40 million tonnes (MT) by 2030. The doubling of domestic production capacity would be done through both organic as well as inorganic route. The company would focus on organic growth for the flat product segment and would participate in inorganic opportunities for the long product segment. In terms of product-wise break-up, by 2030 the target is to increase the production capacity of flat product portfolio to 30 MT (from 15.6 MT currently) and increase the production capacity of long product portfolio to 10 MT (from 4 MT currently). India would be the dominant manufacturing base for TSL, going forward. India's share in the company’s overall consolidated production capacity has increased to 57% in 2020 from 29% in 2010. The country's share is further likely to increase to 73% by 2030.

Outlook

We continue to value the stock on an SoTP basis and arrive at an unchanged target price of Rs 1500. We maintain our BUY recommendation on the stock.