Neutral Tata Steel; target of Rs 110: Motilal Oswal

Motilal Oswal recommended Neutral rating on Tata Steel with a target price of Rs 110 in its research report dated May 17, 2023.

Broker Research

May 19, 2023 / 06:10 IST

Neutral

live

bselive
nselive

Volume

Todays L/H

Motilal Oswal's research report on Tata Steel

TATA is all set to capitalize the vast growth in domestic steel demand amid rapid expansion in the infrastructure, construction, and automobile sector. We believe TATA is adding capacity at the right time to capture the robust growth journey. TATA is one of the largest and cost-efficient steel manufacturers with strong raw material security, which ensures adequate and timely supply of raw materials. With multiple iron mines in India and Canada, TATA’s entire iron ore requirement is met by its captive mines. TATA is also enhancing its iron ore mining capacity from 36mt to 60-65mt , which will ensure adequate iron ore requirement for expanded capacity. TATA offers a wide gamut of flat and long steel products with emphasis on Value-added products (VAP) catering to sectors such as automobile, retail, packaging, construction, energy, consumer durables, and engineering. Globally, steel prices have been under pressure, on the back of lower demand from the USA and Europe and lower-than-expected pickup from China.

Outlook

While TATA is well placed, the stock trades at 5.5x FY24E EV/EBITDA and we believe it is fully priced in at current levels. We reiterate our Neutral rating on the stock with a SoTP based TP of INR110.

For all recommendations report, click here