Motilal Oswal Reiterates Buy Recommendation for TATA Steel, Sets Price Target at Rs 250

Tata Steel Expected to Deliver Strong Performance Amid Safeguard Duty-Led Price Hikes

A recent research report by Motilal Oswal has highlighted the potential for Tata Steel to deliver a better performance in the near to medium term, driven by safeguard duty-led price hikes. The report notes that imports have declined following the implementation of the duty, which could lead to strong volume growth for domestic steel players.

Tata Steel's Domestic Business Poised for Growth

With its ongoing capacity expansions, Tata Steel is well-positioned to capitalize on the longer-term opportunity presented by the decline in imports. The company's domestic business is expected to benefit from the increased demand for steel, driven by the safeguard duty-led price hikes. This trend is expected to continue in the near to medium term, supporting Tata Steel's consolidated performance.

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Gradual Turnaround in EU Business

In addition to its domestic business, the report also highlights the potential for a gradual turnaround in Tata Steel's EU business. Regulatory tailwinds and cost-saving measures are expected to support the company's consolidated performance in this region. This positive development is expected to contribute to Tata Steel's overall growth prospects.

Valuation and Recommendation

Tata Steel is currently trading at a price of 7x FY28E EV/EBITDA and 2x FY28E P/B at its current market price. Despite this, Motilal Oswal maintains its BUY rating for the company, with a target price of INR250 (on FY28 estimate) based on a sum-of-the-parts (SoTP) analysis.

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