Tata Steel Aggressively Expands India Capacity, Receives BUY Rating with ₹210 Target

Tata Steel is undertaking an aggressive expansion of its steel production capacity in India, targeting an increase from 26.5 million tonnes per annum (mtpa) in FY25 to 40 mtpa by FY30. This expansion is driven by strong domestic demand.

Key projects include commissioning a 5 mtpa integrated capacity at Kalinganagar, increasing its total capacity to 8 mtpa, with Phase-III expansion aiming for 13 mtpa. Other significant projects involve scaling up NINL from 1 mtpa to 4.5 mtpa, setting up a 0.75 mtpa Electric Arc Furnace (EAF) at Ludhiana by FY27, and expanding Meramandali from 5.6 mtpa to 8.2 mtpa.

In Europe, Tata Steel is focused on transitioning to green steelmaking, with plans to convert its Port Talbot facility in the UK to a 3 mtpa EAF and exploring a gas-based DRI plus EAF route at IJmuiden in the Netherlands.

The company is poised to benefit from improving steel price realizations, operating efficiencies, and a robust domestic demand outlook. The implementation of safeguard duties is expected to further enhance domestic operations' profitability.

While global uncertainties exist, the long-term outlook for Tata Steel is considered strong. The Indian business is projected to maintain its robust performance, with potential improvements in the European business supporting overall earnings.

At its current market price, Tata Steel is trading at attractive valuations, with a 6.8x EV/EBITDA and 1.9x FY27E P/B. Analysts have upgraded the stock from Neutral to BUY, setting a Sum of the Parts (SOTP)-based Target Price (TP) of ₹210, estimated for September 2027.

Impact Rating: 9/10 This news is highly significant for Indian stock market investors. It details substantial strategic expansion plans by a major player, coupled with a positive analyst upgrade and a clear price target. This provides concrete investment guidance and signals strong potential for future growth, directly influencing investment decisions for Tata Steel and potentially impacting sentiment across the broader steel sector.

Difficult Terms Explained: mtpa: Million tonnes per annum. This is a unit used to measure the production or processing capacity of a facility, like a steel plant, over a year. FY25, FY30, FY27: These denote Indian Financial Years. For example, FY25 refers to the period from April 1, 2024, to March 31, 2025. Integrated Capacity: This refers to a manufacturing plant where raw materials are processed into finished goods through various interconnected stages within a single complex. Electric Arc Furnace (EAF): A high-temperature furnace used in steelmaking that melts steel scrap or Direct Reduced Iron (DRI) using electric arcs. It's often considered a more environmentally friendly steel production method. DRI (Direct Reduced Iron): Iron ore that has been converted into metallic iron without melting, typically using natural gas. It serves as a substitute for steel scrap in EAFs. Safeguard Duty: A temporary tariff imposed by a country on specific imported goods to protect its domestic industries from a sudden and damaging surge in imports. EV/EBITDA: Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization. A valuation metric used to assess a company's total worth relative to its operating profit. P/B: Price to Book ratio. This financial ratio compares a company's stock price to its book value per share. SOTP (Sum of the Parts): A valuation method where a company's total value is calculated by adding up the estimated values of its individual business segments or assets. TP (Target Price): The price level at which a stock analyst or investor predicts a company's stock will trade within a specific future timeframe.