Tata Steel's expansion blueprint prompts diverging views from brokerages

Brokerages remain divided on Tata Steel stock after the company unveiled a fresh round of growth initiatives and acquisitions, prompting varied assessments of its near-term prospects. Tata Group’s flagship steelmaker, analysts said, is entering an aggressive expansion phase at a time when steel prices remain volatile, yet its moves are expected to strengthen feedstock security, deepen its value-added product mix and support long-term earnings.

 

Motilal Oswal Financial Services (MOFSL) retained its ‘Buy’ rating, citing expectations of better steel price realisations, improving operating efficiencies, and a robust domestic demand outlook. JM Financial also maintained its ‘Buy’ stance, noting that while capex clarity and European performance remain key monitorables, disciplined execution positions Tata Steel’s India operations for resilient growth despite a challenging pricing environment.

 

Elara Capital reiterated its ‘Accumulate’ rating, observing that profitability may remain subdued in the near term due to soft steel prices, but Tata Steel’s strategic steps should enhance its terminal value. Meanwhile, Nuvama Institutional Equities retained a ‘Hold’ rating, highlighting plans to add up to 10 mtpa of steel capacity in India by FY32, taking total domestic capacity to 37 mtpa.

Here’s what brokerages said on Tata Steel:

Motilal Oswal: Buy | Target Price: ₹210

MOFSL noted that on December 10, 2025, Tata Steel agreed to acquire a 50.01 per cent stake in Thriveni Pellets (TPPL) from Thriveni Earthmovers for ₹636 crore. The deal gives Tata Steel access to a 4 mtpa pellet plant and a 212 km slurry pipeline operated by Brahmani River Pellets (BRPL), a wholly-owned TPPL unit. According to the brokerage, the acquisition is strategically margin-accretive, strengthens feedstock security for upcoming expansions, and provides support ahead of expiring iron ore mine leases in FY30.

 

The brokerage said Tata Steel is entering a multi-year expansion phase with parallel bets across long, flat, and downstream products. While capex intensity will rise, spending is expected to remain phased, keeping leverage manageable.

 

MOFSL added that the MoU with LMEL positions Tata Steel in the Gadchiroli iron ore-steel cluster, offering multiple growth options. Despite global uncertainties, the long-term outlook is strong, supported by healthy domestic operations and improving European performance.

 

“At the current market price, Tata Steel is trading at 6.5x EV/Ebitda and 1.8x FY27E P/B. We maintain our ‘Buy’ rating with an SOTP-based target price of ₹210, based on September 2027E EPS,” MOFSL said.  ALSO READ | Analysts see BESS boom; RIL, Waaree, Premier set to ride demand J-curve

Elara Capital: Accumulate | Target Price: ₹187

Elara Capital said near-term profitability could be affected by weak steel prices, but Tata Steel’s recent strategic actions should support long-term value. The brownfield expansion at NINL is expected to bolster the long steel portfolio, while downstream additions will enhance high-margin, value-added products. The pellet plant acquisition improves backward integration and reduces supply chain risks, supporting margins.

 

The MoU with LMEL opens up optionality for a large-scale greenfield expansion. Elara said these initiatives, together with earlier cost-saving measures, help mitigate risks from legacy mine deallocations.

 

“We retain our ‘Accumulate’ rating with a target price of ₹187, valuing standalone operations at 6.0x, the EU business at 5.0x, and other businesses at 5.0x,” the brokerage said.

Nuvama Institutional Equities: Hold | Target Price: ₹175

Nuvama said Tata Steel is preparing for its next growth phase, potentially adding 10 mtpa of steel capacity in India by FY32, marking its entry into Maharashtra for crude steel production.

 

While detailed capex plans are yet to be released, Nuvama estimates total growth capex of ₹95,000 crore to ₹1,00,000 crore over the next six years, with ₹70,000–75,000 crore in India and about ₹25,000 crore in Europe, assuming all intended projects proceed. The brokerage believes Tata Steel can fund this internally without increasing net debt.

 

It trimmed FY26E and FY27E Ebitda estimates by 5 per cent and 3 per cent, respectively, due to weaker steel prices, though it factors in an expected price increase of ₹3,000–3,500 per tonne in Q4FY26.

 

“We retain ‘Hold’ with a target price of ₹175, earlier ₹183, based on FY28E SOTP. The stock trades at 6.8x and 6.5x FY27E and FY28E EV/Ebitda,” it added.  ALSO READ | Nuvama bets on HDFC AMC, KFin as SIPs hold firm, lump-sum flows rebound

JM Financial: Buy | Target Price: ₹215

JM Financial said Tata Steel’s strategic roadmap reflects a decisive pivot toward scale, integration, and decarbonization, with three themes shaping the medium-term outlook. First, the 4.8 MTPA Phase-1 ramp-up at NINL strengthens the long-products franchise at low cost, leveraging captive iron ore mines to boost profitability and rebalance the portfolio from flat to long products. Second, the MoU with Lloyds Metals enables access to Gadchiroli’s ore hub, slurry and pellet capabilities, and optionality for a phased 6 MTPA greenfield plant, complemented by the 50.01 per cent acquisition of Thriveni Pellets (₹640 crore), which secures pellet supply with a 1-year payback.

 

And the final is the 1 MTPA HIsarna demonstration plant that supports low-carbon technology with coke-free, lower-emission smelting, flexible ore usage, and proprietary IP. 

(Disclaimer: The views and investment tips expressed by the brokerage in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.)