Tata Steel's Pellet Plant Deal To Be A Long-Term Margin Booster, Says Motilal Oswal — Check Target Price
Tata Steel is one of the largest players in India's steel sector and is set to benefit from improving steel price realizations, operating efficiencies, and the strong domestic demand outlook. While near-term challenges persist due to global uncertainty around tariff escalations, the long-term outlook for Tata Steel remains strong.
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Motilal Oswal Report
Motilal Oswal has reiterated its Buy rating on Tata Steel Ltd. with a target price of Rs 210, implying a 27% upside from the current market price of Rs 166.
View and valuation
The Thriveni Pellets acquisition is strategically margin-accretive in the long run. The 4mtpa pellet capacity and slurry pipeline will strengthen feedstock security for upcoming expansion. It would also support against some of the expiring iron-ore mine leases in FY30.
The company is entering a multi-year expansion phase, with parallel bets across long/flat and downstream products. Capex intensity will rise but remain phased, keeping leverage within comfort.
The MoU with Llyods Metals & Energy positions Tata Steel in the Gadchiroli iron-ore-steel cluster and allows it to explore various growth opportunities.
Overall, the development remains positive for raw material security, value-added product expansion, and optionality in new steel capacities.
Tata Steel is one of the largest players in India's steel sector and is set to benefit from improving steel price realizations, operating efficiencies, and the strong domestic demand outlook.
While near-term challenges persist due to global uncertainty around tariff escalations, the long-term outlook for Tata 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.
At current market price, Tata Steel is trading at 6.5x EV/Ebitda and 1.8x FY27E price/book.
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