Buy TATA Steel; target of Rs 210: Motilal Oswal

Motilal Oswal's research report on TATA Steel

Tata Steel on 10th Dec’25 has agreed to acquire a 50.01% stake in Thriveni Pellets (TPPL) from Thriveni Earthmovers (TEMPL) for a cash consideration of INR6.36b. With this acquisition, TATA will get direct access to a 4mtpa pellet plant and a 212km slurry pipeline operated by Brahmani River Pellets (BRPL), a 100% subsidiary of TPPL. The facility is strategically located in Jajpur (Odisha), aligning with TATA’s eastern operations. After the deal completion, TATA will become the controlling shareholder of TPPL, while Llyods Metals & Energy (LMEL) will continue as a partner with a 49.99% stake. TATA’s stated objective behind the TPPL acquisition is to secure long-term pellet supply for India operations. Pellet is a key raw material for BF-BOF and DRI units, and the acquisition will support the backward integration. The move is in line with TATA’s long-term strategy of securing feedstock against expiring iron ore mining lease by FY30.

Outlook

At CMP, TATA is trading at 6.5x EV/EBITDA and 1.8x FY27E P/B. We maintain our BUY rating with an SOTP-based TP of INR210, based on Sep’27E EPS.