Tata Steel shares up 6%; key takeaways from investor call, target prices

Tata Steel Ltd saw its shares rallying 6 per cent in Friday's trade after the steelmaker hosted an investor call, where the Tata group firm announced a major transformation plan at Tata Steel Netherlands (TSN). A handful of brokerages that attended the investor call, hosted by Koushik Chatterjee (ED & CFO), suggested a 'Buy' rating on Tata Steel.

The stock rose 6.09 per cent to hit a high of Rs 134.95 on BSE. ICICI Securities noted that the transformation would be built on a multi-pronged approach to maximise production efficiencies, lower fixed costs, optimise product mix and margins. 

The envisaged duration of the transformation plan is one year. It is expected to result in redundancies of 1,600 personnel and benefits in excess of EUR 500 million in FY26, followed by another EUR 50–60mn in FY27. 

"Despite Tata Steel Netherlands being among the most efficient plants globally, management is considering the major transformation plan due to recent inflationary pressures pursuant to Russia-Ukraine war and unsustainably low spreads in Europe. We will keep close tabs on the development. Retain BUY on Tata Steel; unchanged target of Rs 180," ICICI Securities said.

Antique Stock Broking said the UK operations are targeted to cash breakeven by 2QFY26 aided by the recent contract with suppliers for a pickling line at Port Talbot. Demand in Europe is expected to be aided by significant capital outlays in defence and infrastructure to “rearm Europe” and the recent safeguard measures would restrict imports and support European steel prices, it said. 

"We maintain BUY rating with a SoTP-based target of Rs 152 based on an implied 6.6x FY27 EV/Ebitda target multiple," Antique said.

Trump tariff impact
Axis Securities noted that the impact of US tariffs are seen negligible. The US levied 25 per cent tariffs on all steel imports, effective since March 12. Separately, there is a 25 per cent tariff on all foreign auto imports and reciprocal tariffs on the EU, India, and the UK, which have come into effect. 

"Indian steel deliveries at 20 mt form 70 per cent of the consolidated sales volume of Tata Steel and are largely consumed in the Indian market. Indirectly, a negligible quantity of galvanised wires and 10-15kt of select specialty steel is exported to the US. All these are less than 0.01 per cent of FY25 steel deliveries in India," Axis Securities said. 

In the UK, nearly 88 kt out of 3 mt steel sales volume (3 per cent of sales volume) is exposed to the US. In the Netherlands, 60- 70kt out of 6.8 mt is exposed to the US, which is not significant.

Axis Securities suggested a target of Rs 150 on the stock.