Buy Tata Steel: target of Rs 235: ICICI Securities

Moneycontrol • 2 days ago

Original source

Key Investment Pillars

  • India-led growth: India business remains robust, with expected improvement in H2FY27 driven by higher volumes, improved operating leverage, and stronger seasonal demand.
  • European turnaround: European operations are expected to recover gradually, with the Netherlands benefiting from stable DSP operations and higher contract realisations, while the UK targets break-even by Q4FY27.
  • Capacity expansion and downstream growth: Tata Steel is progressing with its 4.8mnt NINL expansion and downstream projects, which are expected to drive long-term growth.
  • Iron ore security and cost savings: The company aims to increase iron ore sales and reduce costs through its structural cost transformation programme.

Thesis Validation Checklist

  • India realisations: Improvement in India realisations by INR 3,500-3,600/t QoQ in Q3FY27.
  • European volumes: Gradual recovery in European volumes as excess inventories clear.
  • Netherlands EBITDA: Improvement in Netherlands EBITDA due to stable DSP operations and higher contract realisations.
  • UK break-even: Achievement of break-even in UK operations by Q4FY27.
  • Debt reduction: Reduction in net debt, with a target to keep leverage manageable.