Hold Tata Steel; target of Rs 325: ICICIDirect

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26 Aug, 2025 12:21

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ICICIDirect's research report on Tata SteelTata Steel UK has signed an agreement to sell its long products Europe (LPE) business to Greybull Capital. The sale for a nominal consideration would be in exchange for Greybull Capital taking on the whole of the business, including assets and relevant liabilities and securing an appropriate funding package. The sale covers several UK-based assets including the Scunthorpe Steelworks, two mills in Teesside, an engineering workshop in Workington, a design consultancy in York and associated distribution facilities as well as a mill in Hayange, France. However, it remains unclear whether pension liabilities would be taken over by new owners, government of UK or remain with Tata Steel. The global steel sector is currently undergoing challenging times due to overcapacity and muted demand. As the LPE business was a loss making entity, hence, the deal, once finalised, would aid Tata Steel to augment its consolidated EBITDA. Hence we expect consolidated EBITDA to increase ~6.8% for FY17E. We have valued the domestic operations at 6.5x FY17E EV/EBITDA and overseas operations at 5x FY17E EV/EBITDA (upward revised from 4x earlier). We have arrived at a target price of | 325 and assigned a HOLD rating to the stock. For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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