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Motilal Oswal Report
Motilal Oswal maintained its FY27/28 earnings estimates on Tata Steel Ltd., considering better volume and an improved pricing environment. At current market price, Tata Steel is trading at 7.1x EV/Ebitda and 2x P/BV on FY28E.
The brokerage reiterates its Buy rating with an SOTP-based target price of Rs 250 on FY28E EPS.
According to the brokerage, overall, Tata Steel posted a strong performance in Q4 FY26 as anticipated, primarily driven by healthy volume and NSR in India business. Combined Europe's Ebitda continues to hover near its breakeven due to operational challenges; however, improving prices will support the margin.
Ebitda improvement is expected for Europe's operations in the coming quarters on account of ongoing cost-restructuring measures and improving prices, along with regulatory measures (CABM/reduction in import quotas) to support domestic business.
The capacity ramp-up in the Netherlands and lower fixed costs should incrementally drive the overall Ebitda performance going forward.
Though there are near-term uncertainties related to price volatility and emission challenges in Europe, the long-term outlook remains strong for Tata Steel.
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