Motilal Oswal Remains Neutral On Tata Steel After Nederland's Restructuring Program; Strong Long-Term Outlook

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Motilal Oswal Report

Tata Steel Ltd.'s Netherlands business is one of the most efficient steel units of the company. The restructuring could reduce employee and other costs, leading to structural improvements in profitability. The company expects its UK business to achieve breakeven by Q2 FY26.

While near-term challenges persist due to global uncertainty around tariff escalations, the long-term outlook for Tata Steel remains strong. The Indian business is expected to continue its strong performance, and an improvement in the European business performance is likely to support overall earnings.

Escalating trade tensions are likely to pose near-term challenges for commodities like ferrous. Developments related to tariffs will remain a key monitorable in the near to medium term. Tata Steel is trading at 5.6 times enterprise value/Ebitda and 1.6x FY27E price/book. We reiterate our Neutral rating with an SOTP-based target price of Rs 140.

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