For Tata Steel's India business, management guided NSR to be flat QoQ in Q4 FY25. Any safeguard duties announcement will support pricing in the near term.
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Motilal Oswal Report
Tata Steel Ltd.'s India business posted a decent performance, driven by lower costs. Domestic demand is expected to improve in Q4, with rising govt. spending and construction activities. The management expects Ebitda losses from UK operations to further reduce in coming quarters, along with capacity ramp-up in the Netherlands and lower fixed costs, which should boost the overall Ebitda performance of its European operations.
Though there are near-term challenges related to high imports and lower realizations, the long-term outlook remains strong for Tata Steel. While the India business is expected to continue its strong performance, improving performance in the European business would support overall earnings.
We have marginally reduced our revenue/Ebitda estimates by 4%/5% for both FY25/26 and PAT by 5%/10% for FY26/FY27. Tata Steel is trading at 5.6x FY27E enterprise value/Ebitda and 1.6x FY27E P/B. We reiterate our Neutral rating with a revised SOTP-based target price of Rs 140.
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