Motilal Oswal Initiates 'Buy' on Tata Steel, Targets ₹250

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AuthorRiya Kapoor|Published at:
Motilal Oswal Initiates 'Buy' on Tata Steel, Targets ₹250
Overview

Motilal Oswal has initiated a 'Buy' rating on TATA Steel, setting a target price of ₹250. The firm expects strong near-to-medium term performance for its domestic business, driven by price increases resulting from safeguard duties and fewer imports. Capacity expansions and a gradual turnaround in the EU business are also anticipated to boost overall results.

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Domestic Gains from Trade Protection

A recent safeguard duty imposed on steel imports is expected to significantly boost Tata Steel's domestic performance. This protective measure aims to reduce foreign shipments, creating a more favorable market for domestic producers to raise sales volumes and prices.

Capacity Growth and EU Recovery Support

Motilal Oswal views Tata Steel as well-positioned for long-term growth, especially with its ongoing capacity expansions. The firm also anticipates a gradual recovery in the company's European operations, supported by favorable regulations and cost-saving efforts, which should significantly improve consolidated financial results.

Valuation and Target Price

Tata Steel is currently valued at approximately 7 times its estimated FY28 EV/EBITDA and 2 times its estimated FY28 Price-to-Book ratio. Motilal Oswal maintains its 'Buy' recommendation and has set a Sum of the Parts (SoTP) target price of ₹250, based on FY28 estimates. This valuation suggests considerable potential upside for the stock.

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Disclaimer:This content is for educational and informational purposes only and does not constitute investment, financial, or trading advice, nor a recommendation to buy or sell any securities. Readers should consult a SEBI-registered advisor before making investment decisions, as markets involve risk and past performance does not guarantee future results. The publisher and authors accept no liability for any losses. Some content may be AI-generated and may contain errors; accuracy and completeness are not guaranteed. Views expressed do not reflect the publication’s editorial stance.