Target: ₹195
CMP: ₹171.90
Tata Steel, in its board meeting held on December 10, affirmed the long-term growth strategy for its India business. It announced: The much-awaited board approval for its NINL long products phase 1 expansion by 4.8 mtpa (from 1.1 mtpa to 5.9 mtpa), providing long-term growth visibility beyond 2030; it has also approved 2.5-mtpa Thin Slab Caster and Rolling facilities at Tata Steel Meramandal to further enhance the finished steel capacity in the flats products; set up a 0.7-mtpa Hot Rolled Pickling and Galvanising Line (HRPGL) at its existing Cold Rolling Complex in Tarapur, Maharashtra, for strengthening its automotive segments for import substitution; MOU with Lloyd Metals & Energy (LMEL) to produce iron ore, set up a 6-mtpa greenfield steel plant in two phases, and assist Lloyd’s in developing its ongoing steel plant expansions; signed definitive agreements to acquire 50.01 per cent stake in Thriveni Pellets Private Ltd (TPPL), subject to regulatory approvals — TPPL owns 100 per cent stake in Brahmani River Pellet Ltd (BRPL), which operates a 4-mtpa pellet plant at Jajpur, Odisha, along with a 212-km slurry pipeline (LMEL holds the balance 49.99 per cent stake in TPPL); approved engineering work for a 1-mtpa Hisarna demonstration plant in Jamshedpur, scaling its proprietary low-carbon technology previously piloted for a decade at the Ijmuiden plant.
We maintain our valuation and recommendation unchanged from our last note. We continue to use SoTP and ascribe a one-year forward EV/EBITDA multiple of 7.5x, 5.0x and 4.0x to India standalone, other operations and Europe, respectively, on September 2027 EBITDA to arrive at our September 2026 forward TP of ₹195/share (unchanged). The TP implies a 17 per cent upside from the CMP. Hence, we retain our BUY rating on the stock