Neutral Tata Steel; target of Rs 1235: Motilal Oswal

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26 Aug, 2025 12:21

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Motilal Oswal's research report on Tata Steel

Tata Steel Long Products (TSLP) has acquired the government’s 93.71% stake in Neelachal Ispat Nigam (NINL) for INR121b. The deal implies an EV of INR129b (at 100% stake) for the 100mt iron ore mine and the land parcel of 2,500 acres. As the NINL plant is a short distance away from Tata Steel’s Kalinganagar plant, the two plants will have a certain level of operational synergies. The plan going forward: The management plans to set up a greenfield long steel products plant of 4.5mt capacity on NINL’s land. This implies that the existing inefficient 1mt mini blast furnace (MBF) and ancillary equipment is likely to be taken out to make way for the new plant.

Outlook

We cut our consolidated FY22E/FY23E EBITDA estimate by 10.8%/7.3%, raise our net debt assumption to factor in: a) the current acquisition and b) slowdown in steel cycle, with rising coking coal costs. We value Tata Steel on a SoTP basis at INR1,235 (from INR1,565 earlier). Key risk to our forecast is a slowdown in China.

More Info

At 17:30 Tata Steel was quoting at Rs 1,167.65, up Rs 82.20, or 7.57 percent.

It has touched an intraday high of Rs 1,173.90 and an intraday low of Rs 1,086.60.

It was trading with volumes of 701,137 shares, compared to its thirty day average of shares, a decrease of percent.

In the previous trading session, the share closed up 0.08 percent or Rs 0.85 at Rs 1,085.45.

The share touched its 52-week high Rs 1,534.60 and 52-week low Rs 597.45 on 16 August, 2021 and 01 February, 2021, respectively.

Currently, it is trading 23.91 percent below its 52-week high and 95.44 percent above its 52-week low.

Market capitalisation stands at Rs 142,649.90 crore.

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